moved, that so much of the Fourth Report of the Select Committee on Railways as relates to the alteration of the 33rd Standing Order be adopted by the House. In stating the reasons which had induced the Committee to recommend these alterations, he was sure that the House would allow him to move the adoption of them before the evidence upon the subject was laid upon the Table of the House. The reasons upon which he asked the House for its support in this manner, were, first, that the whole matter was one rather of general policy than of evidence, and, secondly, and equally with the former, that that change was one which affected in a most vital degree the proceedings of projectors, and one which it was most important to make known to all parties to Railways, both in England and Ireland, with a view to the prosecution of them. The changes which the Committee proposed in the Standing Orders were two. They thought that the amount of deposit to be made by Railway projectors ought to be reduced from 10l. per cent. to 5l. per cent., and the second change which they proposed was, that that portion of the Standing Order should be omitted which required that three-fourths of the shareholders should be parties to the deposit. As to the second of these changes, he did not think that there could be any doubt as to its propriety, first, because the Order had never been hitherto complied with, and then, because it was obvious it never could be carried out hereafter, inasmuch as the shareholders in a Railway scheme were a large body, and it was impossible that they could all meet to determine who among their number were to become parties to the deposit, while one quarter of their numbers were to be exempt from responsibility. In proposing alterations in these Standing Orders, he did not wish to cast the slightest imputation upon them. It might be, that when they were passed they were the best that could be made, and he was convinced that they had produced most beneficial effects. They had performed the object for which they were intended, because their operation was this,—that so far the House had the guarantee it ought to obtain from the parties to a projected Railway that the scheme was a bonâ fide one. As to the persons by whom the money was advanced, that was a matter of private arrangement made by those having the command of capital. So far as the establishment of liability for a certain amount of money went, that was a secondary point. Upon the other side, however, these Standing Orders had produced very prejudicial effects. The House was aware, that Railway speculation proceeded by fits and starts; that in times of prosperity, they were projected in multitudes, and that at periods of commercial depression few were undertaken. It was thus desirable that upon occasions like the latter such speculations should not be oppressed by the difficulties of raising capital. He was willing to allow that the effect of these Standing Orders, which were passed for the purpose of checking bad speculation, had been to put a stop to schemes well grounded in themselves, at a period when trade was depressed. The disadvantage of this was very great, because they effected a restriction on speculation at a time when anything promising to stimulate the demand for labour would tend most materially to revive public confidence. As far as regarded the Railways of this year, and the parties presently concerned, he had not heard of any general speculation to which the changes contemplated would not prove desirable and do good. It might be asked, "What security have you that Railway schemes such as you would protect shall really be entered into?" but it would be remembered that he did not propose to remove the check altogether, but to lessen it; so that if a proper speculation was not intended to be carried into execution, the restriction would be one of the best and severest punishments that could be applied. At the same time he was bound to say, that if it were not for the particular circumstances connected with the Dublin and Cashel Railway, he should have been inclined to postpone making these alterations for other Measures which would be necessary very soon, in order to institute an examination upon Railway Bills more systematic than any hitherto practised. Probably there would be danger in such alterations, but the House would probably prefer doing so to trusting in future years to the same unregulated way of proceeding upon Railway Bills as prevailed at the present moment. He would not now enter into an explanation to the House as to the nature of these Measures, because their precise character was then occupying the attention of the Committee which the House had appointed to inquire into Railways in general; but this he would say, that some method for examining such schemes with a view to the great interests of the public ought to exist and was requisite. It was, therefore, that he ventured to put it to the House, that they might proceed, as far as they safely could, to part with a portion of a security which was taken in the form of a deposit. The propositions which he had made would assimilate the proceedings upon Railway Bills in that House to the method pursued in the House of Lords, and he was aware that that method had not been adopted without the most careful consideration. Indeed it was notorious that the regulations of the Upper House on such points had been formed with great caution, and on that account, if on no other, the change proposed carried with it considerable weight. It had been suggested that parties instead of depositing money, might be allowed to deposit Exchequer bills and other securities, and it seemed to be the impression that the deposit money remained in an unfruitful state while so placed. But such was not the fact. There was nothing in the enactments of Parliament which prevented the investment of these deposits in the public securities after the deposit had been made. The right hon. Gentleman concluded by moving, that the Standing Order 33 be repealed.

Order, No. 33, read, and repealed. The right hon. Gentleman then moved,

"That previous to the presentation of a Petition for a Railway Bill, a sum equal to one-twentieth part of the amount subscribed shall be deposited with the Court of Chancery in England, if the Railway is intended to be made in England; or with the Court of Chancery in England or the Court of Exchequer in Scotland, if such Railway is intended to be made in Scotland; and with the Court of Chancery in Ireland, if such Railway is intended to be made in Ireland."

said, that he had listened with great attention to the observations that had fallen from the right hon. Gentleman, but, looking at the great evils which the Standing Order was intended to prevent, he doubted the propriety of abrogating it. He was not aware, from the notice of the right hon. Gentleman, of the extent to which he intended to go, and he confessed that he did not see why greater facilities should be offered to speculators of this kind than to others. As a proof of the necessity of the present Standing Order, a case had been proved before the Committee in which 100 labourers had received 5s. each for signing five different names, subscribing 5,000l. in order to make the list for the prospectus; and that wag not at all a solitary case. He thought that 10l. per cent. was not too large a deposit to require, and he had great doubts as to the propriety of making exceptions of the kind as to Railroad Bills. He asked, before assenting to the proposition of the right hon. Gentleman, for the production of the evidence which had been taken before the Committee, and he would move the postponement of the discussion on the Standing Order, until the House had that evidence before it.

professed his inability to add anything to the reasons which had been so ably stated by the right hon. Gentleman for the proposed alterations. He agreed with his hon. Friend the Member for Montrose, that when these undertakings were little understood, when the wildest speculations were entered into, such precautions were necessary; but now matters of that kind were better understood, and these deposits tended only to prevent bonâ fide undertakings from proceeding. He fully concurred in the observation of the right hon. Gentleman, that it was most desirable that enterprises of this nature should not be subjected to unnecessary restrictions.

admitted, that the House was pot bound by the recommendation of the Committee; but still, when the House committed certain points to the decision of appointed Members, their recommendation, though not binding, deserved the respectful consideration of the House. The Committee was composed of Gentlemen admirably qualified to decide upon the subjects before them, and they had the advantage of deliberating carefully concerning it. He (Sir R. Peel) was therefore prepared, upon this view, to give his vote agreeably to the recommendation of the Committee. But he took another ground upon this occasion. These propositions, if successful, would have a material effect upon a project, the completion of which would be of the greatest advantage to Ireland. If the difficulties raised by the Standing Order ceased, the impediments to the formation of a railway between Dublin and Cashel would be removed. This railway had been undertaken without a grant from Government: it had been undertaken by men of a very different party in politics, and it would be of great advantage to have men differing in every other way, combining and co-operating in an object of this kind. It was desirable that the undertaking should be proceeded in without delay, and, if successful, he did not doubt that it would have a most important effect as an example, as it would be the means of inducing men in Ireland to turn their attention to similar enterprises. He did hope that the House would have the satisfaction of seeing the Royal Assent given to a Bill for the formation of a railway between Dublin and Cashel before the close of the Session.

complained that the right hon. Gentleman, the President of the Board of Trade had not, in his Notice of Motion, stated his propositions fully. The House had been told that the Standing Order was no longer necessary, but they were not told what it was that had rendered it so. If the alteration was advisable in the case of the Dublin and Cashel Railway, it might be made for that particular case, but no general rule should be laid down to regulate all future railway schemes, without examining the evidence upon which the Committee founded its recommendations. He would, upon these grounds, vote with the hon. Member for Montrose.

said, that keeping the Order as it at pretent stood was a practical fraud. He would, therefore, support the Motion of the right hon. Gentleman opposite (Mr. Gladstone).

said, he would vote for the Motion of his right hon. Friend, independently of its operation on the Dublin and Cashel Railway Bill; but its effect on that measure would be an additional reason for supporting it.

thought the House ought to have some further information on the subject, in order that it might know the grounds on which the Committee had made this recommendation. He would suggest that the discussion should be postponed until such information was produced.

was also of opinion that further information should be laid before the House, before the discussion was closed. The Standing Order in question was calculated to prevent gross abuses in private Bills, and ought not to be suspended except for very grave reasons.

moved, as an amendment, the adjournment of the discussion, until the evidence taken by the Committee was laid on the Table.

said, that great pains had been taken by the Select Committee to get full information on the subject, and the House might rely on it that they had abundant evidence as to the expediency of suspending the Standing Order before they recommended that course. If this discussion were now put off, it might be to the end of the Session. The amount of deposit as proposed by the Motion was, he considered, quite reasonable, and sufficient to guard against abuse.

would admit the general principle, that before consenting to any proposition of a Select Committee the House ought to have before it the grounds on which that proposition was made; but there was quite enough in this case to make it an exception to that principle.

would not press his amendment. If the House was determined to act foolishly he would not stand against it.

Amendment withdrawn. Original Motion agreed to.

Ordered that the said Resolution be a Standing Order of the House.

wished to ask a question of the noble Lord, the Secretary for the Colonies, on a subject to which he had called his attention in an early period of the Session It related to a Bill which had been passed by the Legislature of the Canadas, and had been sent over here for Her Majesty's Royal Assent. The Bill was a measure relating to Secret Associations in Canada. On the occasion of his first question he was informed that the Bill had not then arrived in this country. What he wished to know now was, whether the Bill had since received Her Majesty's Assent?

said, that the Bill had reached this country, but could have no validity until the sanction of Her Majesty was given to it; and, under all the circumstances, he did not deem it right to advise Her Majesty to assent to it.

wished to know whether the right hon. Baronet at the head of the Government would object to lay on the Table of the House Copies of the Correspondence between the American Minister and the British Government on the subject of the annexation of Texas to the United States? Such Papers would be important, as they showed by our exertions on the subject of slavery, an attempt on the part of our Government at interference in the internal affairs of other countries.

was not prepared to lay on the Table any correspondence with America on the subject of the annexation of Texas.

wanted only that part of the correspondence which related to what he considered the interference of Great Britain in the internal affairs of another country. The documents to which he referred had been already made public in America.

repeated, that he would not consent to the production of any of the documents referred to. If they had been already made public, the hon. Member could have access to them. Her Majesty's Government would not follow the example set by other countries, in the publication of such documents in the newspapers.

^* in moving the Order of the Day for the House going into Committee on the Bank of England Charter Acts, said; Sir, I should feel very unwilling to interpose any observations of mine, before the com- mencement of the discussion on the Resolutions which I am about to move, and would content myself with moving at present, that the House do agree to those resolutions, if I did not think it would be for the convenience of many Members who are likely to take a part in the discussion, and for the benefit of the discussion itself, that I should make some explanations on particular points, with respect to which, I think it probable that questions will be asked. I, therefore, think it better to anticipate many of those questions and give to them in a connected form the answers which I must give separately, if they are separately put. It was necessary, as the House will bear in mind, for Her Majesty's Government to frame their Measure, and for me, as the organ of that Government, to make the statement which I submitted on the 6th of May, without the advantage of communicating with parties whose opinions on such a Measure as that which we proposed were justly entitled to great weight. Entire secrecy, however, in all matters calculated to affect the currency, was absolutely necessary; and, however much we might feel di.posed to confide in the honour and integrity of many individuals, yet, we thought it advisable to forego the advantage of private communications; and, having formed our opinion on the evidence taken by Committees and on public documents within our control, to submit our views to Parliament. If, after the public explanation of these views, and after the opportunity afforded to us of hearing the opinions of others, we had seen reason to modify our own, we should have no hesitation in doing so. But nothing has occurred during the interval which has elapsed which induces Her Majesty's Government to vary, in its leading principles, the plan announced by me on the 6th of May. There are, however, points of detail, in respect to which I have explanations to give and modifications to propose. I will first refer to that part of the plan which concerns the Bank of England and its connection with the Government. The House will no doubt recollect, that when I proposed the plan on the 6th of May, I suggested to the House, that it might be desirable that the Bank of England sbould make its issues upon securities and upon bullion, — partly on the one and partly on the other; that the amount of securities on which issues should be made should be limited to 14,000,000l. and that the remainder of the issues of the Bank should take place on bullion alone, the amount of that additional circulation being subject to the influence of the exchanges. At the same time, I fore-saw a case in which it might be consistent with the principle of the proposed Measure, and in which it should be perfectly legitimate, that the Bank of England should add to its issue upon securities. Assuming the circulation of the Joint Stock Banks and of the country Banks to be about 8,000,000l. at the present time, it is possible, either through the occasional failure of some of these establishments, or from the voluntary liquidation of their accounts, or in consequence of an agreement with the Bank of England, that some portion of their existing circulation may be discontinued. Suppose the country circulation to be 8,000,000l., and that in consequence of voluntary agreements or other causes it should be diminished by one-half, to 4,000,000l.; in that case, it might be perfectly fit that the Bank of England, in order to supply the void thus created, should issue Bank of England notes, and that that issue should in part take place upon securities. I proposed originally, that the Bank of England should not be permitted to increase its issues upon securities except after communication made to the Government, and with the consent of three Members of the Government— the First Lord of the Treasury, the Chancellor of the Exchequer, and the President of the Board of Trade. I did not reserve that power of increasing the issues upon securities, from any distrust of the great principles which I laid down; I did not propose that power of interference on the part of the Government in order to meet any possible, but unforeseen contingencies; but in order to meet, bona fide, a particular case; namely, the cessation by issue by Banks other than the Bank of England. On consideration of that part of the plan, I think it would be advisable, if possible, to prevent all direct interference in this matter on the part of the Executive Government. At the same time, I do not think it would be advisable to give to the Bank an absolute power by law to increase its circulation upon securities, in every case of the withdrawal of country notes without exception. I can foresee cases wherein a void may be created in the country circulation, without a corresponding necessity for an increased issue upon securities. Take the case at present: the Bank is possessed of a great amount of bullion, not less than 16,000,000l. The banking department of the Bank of England will be possessed of not less than 30,000,000l. of bank-notes, 14,000,000l. issued on securities, and 16,000,000l. on bullion; a great proportion of these bank-notes will necessarily lie dormant in the coffers of the banking department, because it is not probable that more than 22,000,000l. can be made available for the supply of the legitimate demands of commerce. Supposing then, a void to be created (in the county of Cornwall for instance), a void of, say 200,000l., by the withdrawal of country notes in circulation, I am not at all prepared to say that the Bank of England ought at once to increase its issue of notes upon securities. Why should not the country banks apply for some portion of the dormant notes in the Bank of England to supply this void, receiving from the Bank a per centage on the issue of Bank of England notes? If it should be desirable to issue fresh notes on securities, then the Bank should have the means of issuing them; but I do not think it advisable that, under all circumstances, the supply of the void should be provided for by the increase of issue on securities. I propose to reconcile these two objects in a manner which appears to me unexceptionable, avoiding any direct interference on the part of the Executive. I propose in the preamble of the Clause, to recite distinctly what are the grounds which, in the opinion of Parliament will justify an increased issue by the Bank on securities; these are, the failure of a country bank, the voluntary withdrawal by a country bank of its issues, or an undertaking by a country bank to abolish its own circulation upon the condition of being supplied with Bank of England notes. The recital of this in the preamble will manifest the intentions of Parliament. I propose, then, that the Bank, if it should desire to make an increased issue of notes upon securities, should not be allowed to do so except upon permission given by Her Majesty in council, such permission to be published immediately afterwards in the London Gazette. I prefer this course to giving the Bank an absolute power, at its own unfettered discretion, to increase its issue of notes upon securities. I am certain that, while the present management of the Bank continues, that power would not be unduly taken advantage of; but still it is advisable to guard against the possibility of abuse. I propose, therefore, not to permit the increase of securities except with the sanction of the Privy Council, and except, also, on the express condition that the amount of additional securities shall not exceed two-thirds of the amount of issue, the remainder of the issue taking place upon bullion. There is another point of great importance connected with the issues of the Bank of England, to which I did not direct the attention of the House on the last occasion. The question is, what shall be the definition of "bullion," as the foundation of issue? Shall the Bank be required to issue notes upon gold coin or gold bullion alone? or shall the Bank be permitted to issue notes in exchange for silver as well as gold? Hitherto, silver has always been included in the return of bullion made by the Bank. "Bullion" includes not merely gold coin of our mint, but gold in bars, foreign gold coin, and also silver. Shall we restrict the issues that are to take place upon bullion exclusively to gold, or shall issues be permitted upon silver; and, if permitted, to what extent? A rigid adherence to principle would seem to require that gold alone should be the foundation of issue; that the amount of notes should fluctuate with the influx and efflux of gold. But I doubt whether we may not permit at least a partial issue of notes upon silver, without any departure from principle, and with great convenience to commerce. I propose, of course, to require that the obligation to pay notes in gold, and to issue notes in exchange for gold, shall remain in full force. The Bank must pay its notes in gold at the rate of 3l. 17s. 10½d., and must issue notes in exchange for gold, receiving the gold, if it be bullion, at a certain estimated rate, so much less than 3l. 17s. 10½d., as shall be sufficient to cover the expense of coinage; the rate will probably be 3l. 17s. 9d. per ounce. If an issue on silver be permitted, that issue must be with the voluntary consent of the party offering silver or receiving silver in exchange for notes. The reasons in favour of permitting the issue on silver with such consent are these:—The facility of exporting silver in preference to gold, when such export is expedient, is the true remedy against the inconvenience of out standard differing from that of other countries; and unless the circulation department is allowed to issue against silver, that inconvenience might occasionally be severely felt. So long as a silver standard is not recognised and silver coin is used only as tokens under 40s., no quantity of silver likely to be in the Bank can affect the standard value of the gold sovereign: but the sale of that silver may save useless coining of sovereigns, and answer the same purpose. Silver generally arrives from America, and latterly from China, in large amounts, and at pretty regular periods. If the Bank is restricted from purchasing that silver, it will always be bought by merchants, who will export it immediately, the principal demand being for the Continent. No capitalist will find it to his advantage to hold it, the variations in price seldom, if ever, compensating him for the loss of interest. When the exchange is low, and the price of silver high, this export acts advantageously in liquidation of payments due to foreign countries; but when the exchange is high and silver low, the silver will sell at a lower price than if the Bank were allowed to buy it, and it will be exported solely for the purpose of bringing back gold, the expense of the export of the silver and the import of the gold being an actual loss on the transaction. The practice of the Bank has been to buy bar silver at 4s. 11⅛d., and dollars at 4s. 9½d.., which at the French mint prices is equal to buying gold at 77s. 9d. When the exchanges have fallen, and there has been a demand for remittances to the Continent, the Bank has sold the silver, and such sale has answered all the purposes of gold, has left a small profit to the Bank, and saved the expense of exchanging silver for gold. An unnecessary export of silver, that is, an export when it is not required to rectify the exchanges, causes a momentary rise in the exchange, which again falls back to its original rate so soon as the operation is ended. This momentary rise in the exchange, so long as it lasts, is prejudicial to all parties who may have to draw bills upon the Continent in payment for goods and other exports. A stock of silver in the Bank is convenient to our trade, particularly with India and China. Merchants often require that metal as a remittance, and would have to send to the Continent for it at a greater expense, if they did not find a supply at the Bank. But if the Bank is absolutely restricted from the issue of notes upon silver, the stock of silver retained by the Bank will be a very limited one, as it will not answer the purpose of the Bank to purchase silver and hold it as a part of its assets in the banking department. For these reasons, I am inclined to propose that the Bank shall have the power of issuing notes on the deposits of silver. There should, I think, be a limit to the extent to which this issue shall be allowed. If we provide that the amount of silver on which issues may take place shall not exceed one-fourth of the amount of gold—(for instance, if there be four millions issued upon gold, permitting an issue upon silver to the extent of one million)—we shall probably ensure the maintenance of such a stock of silver as may give facilities for rectifying the exchanges and supplying the demands of commerce, and incur no risk of infringing upon that principle which will impose a positive obligation upon the Bank to receive gold in exchange for notes, and to pay notes in gold coin on demand. These are the only points on which I have any explanation to offer so far as the Bank of England is concerned. I proceed to points connected with the affairs of Joint Stock Banks and private banks. It is proposed that every bank now exercising, bonâ fide, the privilege of issue, or rather, I should say, which did exercise it on the 6th of May last, should be permitted to enjoy that privilege within certain limits; that in the case of each bank, the bank-officer should make up an account of the amount of issues for two years preceding the 6th of May, 1844, and that in each case the average amount of such issue should be the maximum of future issue. It is proposed that each bank shall make a return to the Stamp Office of its daily issues; that this return shall be made on some day in the week following, to be named by the Stamp Office, and that the average amount of issues during the preceding week shall not exceed the maximum which the Bank is allowed to issue. Originally, it was proposed that the issue of no single day should exceed the maximum: but in order to prevent the attachment of penalties to an inadvertent excess of issue on some one particular day, it will be more convenient to take the average of the weekly issue, and to require that that average shall not exceed the maximum. There are some cases in which, within the period of two years, there has been a union of banks, in which one bank has purchased the business of another bank—the goodwill of the concern; and in such a case, if we take the average amount of the issues of the surviving bank for two years, that might not be perfectly fair, because the present amount of united issue might greatly exceed the amount which would appear upon the average of the single bank for the period of two years. In the Bill, therefore, I shall provide for cases where there has been a union under contract and written agreement, upon that contract and written agreement being furnished to the Stamp Office. Our wish is, to reconcile the establishment of a great principle to existing interests, with as little danger and inconvenience as possible. I have been asked what I propose with respect to branch banks—"May Joint Stock Banks now in existence add to the number of their branches?" My answer is, They may: but they must not upon that account increase the maximum of their circulation They may transfer business from an existing branch to another branch hereafter to be constituted, but in no case must the transfer lead to an increase of the maximum of permitted circulation. We know the total maximum at present to be about 8,000,000l. That is about the amount of issue in England and Wales, calculated upon the average of the last two years; and we intend, as far as we can, to give to the Bank of England, which is to have controlling power over issues, the assurance that in no case can that aggregate amount be exceeded. I have been asked this question—"Supposing there should be now two private banks with three partners each: will you object to the consolidation of those private banks, and the carrying on of the joint concern as one private bank with six partners? and what would be the amount of issue in that case to which the united bank would be entitled?" I do not propose to prevent such a consolidation; and I consider that the united bank should have the power of issuing an amount of notes equal to the aggregate amount of the two banks when separate. In respect of branches, the law requires amendment. I doubt the policy which some banks have pursued of establishing very numerous branches. I doubt whether banks having fifty or sixty branches —some in very small towns, renting ex- pensive houses, and appointing agents with considerable salaries — can derive profit from such a course. It is the great competition which exists, and the desire to monopolise the circulation, which has probably led to it. The law, however, offers no impediment: it rather encourages the extension of branches, because the law requires the payment of duty for four branches, and no more: that is to say, a joint-stock bank taking out a license for four branches has the power to establish an unlimited number without any further payment. Now we will not object to the establishment of new branches, but we propose to require payment for the license for each new branch that may be established. I propose, therefore, if any bank establishes a new branch, that it shall be required to take out a fresh separate license, the cost of which amounts to about 30l. I have also been asked, "Do we propose that joint-stock banks shall have the liberty to purchase up the right of the circulation of private banks?" We are willing, so long as the character of the institution is not changed, to admit the consolidation; but we do not propose to permit a joint-stock bank to increase its circulation by purchasing the right of issue of a private bank. I have been asked, again, "Will you permit the substitution of partners? will you allow the son to be placed in the position of his father?" I say, certainly. We can give no guarantee as to the continuance of this privilege of issue. We think Parliament has a perfect right at any time, if the privilege be abused, to apply an immediate remedy. So long, however, as the present system exists, we advise the House not to attempt a vexatious and unnecessary interference with these concerns. We should therefore permit the substitution of the son for the father as a partner. We are of opinion, also, that to permit the entrance of a new partner into a private bank may be advantageous to the public as well as to the bank itself. A wealthy man may be desirous to add his capital and his responsibility to the bank; and to such a course we oppose no objection. It is said, "Suppose the admission of new partners be carried to such an extent that the character of the partnership should be totally changed; suppose there be six new partners instead of the six old ones; will you permit this wholesale substitution?" We recommend that we should not make the attempt to prohibit it by law. Such a substitution may seem an abuse of the conceded privilege of issue; but we deprecate any thing like unnecessary and vexatious intermeddling. It would be easy to evade any enactment intended to prevent extensive substitution of partners. There is an important stipulation which we propose to make with the Bank of England, and which we think to be just to other banks. Some of those banks have inquired whether we would permit the discontinuance of the arrangements made by them with the Bank of England for the issue of notes of the Bank of England, and the substitution of a corresponding amount of their own notes, thus increasing the issue of their own notes beyond the average of the two years. We do not propose to permit that exchange of notes. We do not propose that any bank, having entered into an arrangement with the Bank of England, shall be allowed to discontinue the Bank of England notes and to resume their own notes; but, if we refuse that to the private bank, we should give that private bank a guarantee that the Bank of England will grant the accommodation of Bank of England notes upon as favourable terms as it was before held. We propose, with the full consent of the Bank of England, that any bank wishing to relinquish its connexion with the Bank of England may have the power of doing so; but it shall not, in that case, be allowed to resume its own issues. If, on the other hand, it wishes to continue its connexion, the Bank of England shall be compelled to continue the supply of Bank of England notes upon terms not less disadvantageous than the present. I must here advert to a change which the Bank is about to make in its arrangements in respect to the issue of Bank of England notes by other banks. These arrangements are at present of a twofold nature. Some banks are allowed by the Bank of England a commission of 1 per cent. on the amount of notes actually in circulation; others are permitted, as an equivalent for a 1 per cent. commission, to open a discount account with the Bank, and to have bills discounted at 3 per cent. for an amount varying between certain prescribed limits. The Bank proposes to discontinue the discount account, and to act with respect to all banks on one uniform rule, making an allowance to each of 1 per cent. on the amount of Bank of England notes actually issued. I do not think there is any other point of importance with respect to which I have explanation to offer; and here, perhaps, I ought to close, and permit the House to proceed to discussion upon the resolutions. But I am told that my chain of argument the other night was incomplete; that there was no necessary connexion between my premises and my conclusions; that I did not show the necessity of interfering with the circulation of joint-stock banks or country banks; that I did not establish the policy of giving an increased control to the Bank of England over other banks. Now I am not conscious that any link in the change of argument was wanting. I attempted to show that competition amongst the issuers of notes was a bad principle—that the same arguments which support competition in the supply of other articles did not apply to the supply of paper currency. I attempted to show that where there is an unlimited number of issues, there is no feeling of individual responsibility; and that no man, whatever his desire might be, would sacrifice his interests for the public good, when he knew that his neighbours would not follow his example. I also attempted to show, from the admission of the representatives of issuing banks, that their practice was at variance with the principle which ought to regulate a paper currency; that there was no reference to the exchanges; that, as it was once said by a private banker, "there is no more regard to the exchanges than to the snow upon the mountains." I attempted to show, from the same admissions, that increased prices led to increased issues; that there might, therefore, be a stimulus to speculation at the very time when there ought to be discouragement. I cited the example of the United States, for the purpose of proving that competition in issue, though controlled by unlimited responsibility of partners, and by the promised convertibility of paper into coin, was no security against insolvency of banks and general derangement of all monetary transactions. If, however, there be any who consider the proof defective, who think sufficient ground has not been shown for checking the privilege of issue, and increasing the control of one central authority over the paper currency, I shall be glad to fortify my position by additional arguments. If the example of the United States be not admitted as a rule for us, I am quite content to look at home, and to examine the results of our own system on our own interests. I will endeavour to prove to you conviction, from the domestic experience of twenty years, that now is the time when, if you are wise, you will take security against the unlimited competition in issues, will increase the control of one superintending Bank, and will prevent alternations and vicissitudes in that medium of exchange which is to regulate the value of every article in this country. Let us review the several periods occurring within the last twenty years, when there has been a derangement in the monetary affairs of the country, and when, in order to maintain the convertibility of paper into gold, there has been the necessity for sudden contraction of issues. There have been, I think, four such periods—in 1825, in 1832, in 1835–36, and in 1838–39. Let us see in three of these periods what has been the action of the country banks. In November, 1823, the bullion in the possession of the Bank was 13,760,000l.; in November, 1825, it was reduced to 3,012,000l. If the principle of a metallic standard and the doctrine as to the variation of paper with the state of the exchanges be admitted, there ought to have been a considerable decrease in the amount of paper. But it is estimated that between November, 1823, and November, 1825, there was an increase in the amount of country bank paper of from 4,000,000l. to 8,000,000l. Again, on the 1st of January, 1834, the bullion in the Bank of England amounted to 9,948,000l.; in 1837 it had suffered a diminution of about 6,000,000l., being reduced to 4,071,000l., while the country bank circulation had increased from 10,142,000l. in 1834, to 11,031,000l. in 1837, and in the middle of August, 1836, when you were at the very verge of the crisis the country bank circulation was actually 12,000,000l. On the 26th of June, 1838, the bullion in the Bank was 9,722,000l.; in June, 1839, it was reduced to 4,344,000l., and the country bank circulation, instead of being diminished, was again increased. It amounted to 11,740,000l. when the Bank had 10,000,000l. of gold, and it was increased to 12,725,000l., when the Bank had only 4,300,000l. of bullion. Surely these facts, taken in conjunction with the admissions of the country bankers as to the principles on which their issues are regulated, are decisive proofs of defects in our present system of currency. I do not mean to say that country banks or joint-stock banks were alone responsible for the events that occurred at those periods. I do not defend the conduct of the Bank of England throughout the whole of those periods! but assigning to the Bank its full share of the responsibility, there is abundant evidence that the principle of unlimited competition, that the increase of issue with the increase of prices, that the unwillingness or inability to regulate the issue of paper by a close observance of the state of the exchange, is fraught with danger. I do not underrate the importance and value of the banking establishments of this country. They are most useful instruments for facilitating the distribution and profitable use of capital, according to the wants of the community, enabling those who require the temporary advance of capital to procure it on the most advantageous terms from those who can supply it. I do full justice to the integrity and high character of the great majority of those who are connected with these establishments. But, if there be defects in the system on which they act, it is our duty to apply a remedy: if there has been an abuse of the privilege of issue; if great losses have been sustained by innocent parties, both as shareholders in, joint-stock banks, as depositors, and as the holders of promissory notes of private banks, which have become insolvent—we are bound to take whatever precautions legislation can provide against the recurrence of such evils. Can we review the history of private banks within the last thirty or forty years, and deny the necessity for legislative interference? In the years 1814, 1815, and 1816, the failures of country banks amounted in number to 240. The number of Commissions of bankruptcy was 89. The lamentable occurrences of 1825 and 1826 must be fresh in the recollection of many of us. With regard to the last few years, a return has recently been laid before the House, which demonstrates the necessity for legislative interference. I hold in my hand a return of the number of private banks which became bankrupt in the years 1839, 1840, 1841, 1842, and 1843, with the amount of dividends paid, so far as the same can be ascertained. The following is the result:—

^* From a Corrected Report.

With respect to the bankers who have become bankrupts, I have before me returns furnished by the Bankruptcy Office, from which I have made extracts. They refer to failures which have taken place since the 1st of January 1839 and give, in some cases, the amount of the assets, in others the causes of failure. The failures to which these extracts apply were ten in number. The names of the concerns I do not mention.

Estates of Bankers who have become Bankrupts, from the 1st of January, 1839, to the 1st of April, 1844.

CAUSE OF FAILURE.

In No.

1. Speculation on Spanish Bonds.

2. Banker a spirit merchant; the spirit trade was obliged to pay much more than its whole profits to the family of the banker's father, and acted as a drain upon the bank.

3. Advances to the partners, and bad speculations entered into by more than one of the partners.

4. Loss on Railway Speculations.

5. The bank had been insolvent for many years. Loss by bad debts, 145,600l.

6. The banker succeeded to a considerable property, mortgaged his estate, overdrew his private account with the bank, issued promissory notes to the amount of 14,000l., bearing interest to depositors of small sums among the humble classes of society, 5,590l. of promissory notes payable to bearer on demand.

7. This bank had been insolvent for many years. Lost large sums in a sugar refinery, and 67,000l.. in a commercial house at Glasgow.

8. Uncle and nephew partners. In the course of eleven years the nephew dissipated 100,000l. of the partnership assets. The uncle died in 1838, leaving a large fortune among his relations. The nephew committed suicide in October, 1840, when the frauds were discovered.

ESTATES.

9. Liabilities 157,960l. Dividend none. Assets 20l.

10. Date of fiat 12th July, 1842. No dividend yet made. Bankrupt had certain racehorses from which the sum of 750l. 5s. was netted.

Surely the conclusion we must draw from the details to which I have referred, both with respect to the frequent failures of banks, and the loss and suffering entailed upon their creditors, is in favour of legislative interference. It is said that the banks which failed were not in all cases banks of issue; but I propose, not merely a check upon the privilege of issue, but an amendment of the law under which banks not being banks of issue are constituted. Should these measures receive the sanction of Parliament, they will not, in my opinion, limit the extent of legitimate accommodation which banks can afford to those who are engaged either in manufactures or in agriculture. I know that it is supposed by some that the issuing power of country banks is intimately connected with, and essential to, the maintenance of agricultural prosperity; and that the paper of the Bank of England cannot be made to serve the purposes to which country paper is applied. Now, let it be remembered, that in a very extensive district surrounding the metropolis, the circulation is in a great measure composed of Bank of England paper. In a circular area round London having a radius of sixty-five miles, the only competitors in issue with the Bank of England are certain private banks. That area includes a very extensive and important agricultural district. It includes the counties of Middlesex, Essex, Kent, Surrey, Hampshire, Oxfordshire, Hertfordshire, Buckinghamshire, Bedfordshire, Cambridgeshire, with a great part of Suffolk and of Northamptonshire. Now, it appears, from the returns made to the Stamp Office, that throughout this great agricul- tural district the total amount of the circulation of private banks is only 1,329,000l. The whole of the remainder of the circulation is supplied by the Bank of England. In some also of the chief manufacturing districts of this country the paper of the Bank of England constitutes almost the exclusive medium of exchange. I mention these facts for the purpose of quieting the apprehension that such a restriction as that which I propose, upon the issues of country paper, will unduly lower the prices of agricultural produce, or diminish the legitimate accommodation which the dealers in capital and money can afford to the trader or the agriculturist. It is said that the Bank of England will not have the means which it has heretofore had of supporting public credit, and of affording assistance to the mercantile world in times of commercial difficulty. Now, in the first place, the means of supporting credit are not means exclusively possessed by banks. All who are possessed of unemployed capital, whether bankers or not, and who can gain an adequate return by the advance of capital, are enabled to afford, and do afford, that aid which it is supposed by some that banks alone are enabled to afford. In the second place, it may be a question whether there be any permanent advantage in the maintenance of private or public credit, unless the means of maintaining it are derived from the bonâ fide advance of capital, and not from a temporary increase of promissory notes issued for a special purpose. Some apprehend that the proposed restrictions upon issue will diminish the power of the Bank to act with energy at the period of monetary crisis and commercial alarm and derangement. But the object of the measure is to prevent, (so far as legislation can prevent) the recurrence of those evils from which we suffered in 1825, 1836, and 1839. It is better to prevent the paroxysm than to excite it, and trust to desperate remedies for the means of recovery. I now commit these measures to the consideration and judgment of the House. They will be thought by some to fall short in the practical application of the principles on which they are founded; by others, probably, to effect too hasty and extensive an alteration of the system which now exists. By the great majority of this House, I trust, they will be deemed a safe and just compromise between conflicting considerations, reconciling the establishment of sound prin- ciples with a fait and liberal treatment of private interests. The right hon. Baronet concluded by moving the first of the following Resolutions:—

1. That it is expedient to continue to the Bank of England, for a time to be limited, certain of the privileges now by Law vested in that Corporation, subject to such conditions as may be provided by any Act to be passed for that purpose.

2. That it is expedient to provide by Law that the Bank of England should henceforth be divided into two separate departments; one exclusively confined to the Issue and Circulation of Notes, the other to the conduct of Banking Business.

3. That it is expedient to limit the amount of Securities upon which it shall henceforth be lawful for the Bank of England to issue Promissory Notes payable to Bearer on demand, and that such amount shall only be increased under certain conditions to be prescribed by Law.

4. That it is expedient to provide by Law, that a weekly publication should be made by the Bank of England of the state both of the Circulation and of the Banking Departments.

5. That it is expedient to repeal the Law, which subjects the Notes of the Bank of England to the payment of Composition for Stamp Duty.

6. That, in consideration of the privileges to be continued to the Bank of England, the rate of fixed annual payment to be made by the Bank to the Public shall be 180,000l. per annum, and shall be defrayed by deducting the said sum from the sum now by Law payable to the Bank for the Management of the Public Debt.

7. That, in the event of any increase of the Securities upon which it shall be lawful for the Bank to issue such Promissory Notes as aforesaid, a further annual payment shall be made by the Bank to the Public over and above the said fixed payment of 180,000l. equal in amount to the net profit derived from the Promissory Notes issued on such additional Securities.

8. That it is expedient to prohibit by Law the issue of Promissory Notes payable to bearer on demand by any bank not issuing such Notes on the 6th day of May 1844, or by any bank thereafter to be established in any part of the United Kingdom.

9. That it is expedient to provide by Law, that such banks in England and Wales as on the 6th day of May, 1844, issued Promissory Notes, payable to bearer on demand, shall continue to issue such Notes, subject to such conditions and to such limitations as to the amount of issue as may be provided for by any Act to be passed for that purpose.

10. That it is expedient to provide by Law for the weekly publication of the amount of Promissory Notes, payable to bearer on demand, circulated by any bank authorised to issue such Notes.

11. That it is expedient to make provision by Law with regard to Joint Stock Banking Companies.

^* Sir, It is not without considerable hesitation, that I venture to present myself to your notice at the very commencement of this debate. I trust, however, that the circumstance of my having, by the kindness of the Gentlemen who formed the Committees on Banks of Issue in the years 1840 and 1841, being placed in the Chair, during their investigations, may, in some degree, be my excuse for presuming to address you thus early. One of the considerations which has induced me to do so, is the wish to avoid even the appearance of an adverse discussion with any of those Members of the Committee from whom I differ in opinion, but to whose support I was so much indebted during our protracted inquiry. It might perhaps be difficult to avoid it, if I waited until they had spoken. I will not, Sir, occupy your attention with any further apology, but will proceed at once to the consideration of the subject of our present debate, the importance of which it is, in my opinion, impossible to overrate. It is a subject in which every member of the community is interested. We are about to legislate for the regulation of the currency, by which as a standard the value of all commodities is measured, which forms the medium of exchange in the transfer of all commodities, which enters into commercial transactions of the greatest magnitude, in which millions are invested, and affects the purchase by the labouring man of the articles which form his daily consumption. Indeed, I had almost said, that it was as much for the interest of the poorest artizan, as for that of the wealthiest merchant, that the principles by which our currency is regulated should be sound, and the application of them certain. I am very glad that the right hon. Gentleman, in the able address with which he prefaced the question now before the Committee, laid down the principles by which, in his opinion, the currency should be regulated. It was, I think, highly necessary, that the assertion of them should be placed in the very foreground of our discussion. The last occasion when the general principles of currency were debated in this House was in the year 1819; and in the quarter of a century which has elapsed since that time, progress has been made in the science which should guide us in these matters, as advances have been made in all other sciences both moral and physical. We have had considerable experience of the working of the present system. Various phenomena have disclosed themselves. Powerful minds have been applied to the investigation of these phenomena. Conclusions have been drawn from them, by which the opinions heretofore entertained on such subjects, have been in some degree changed or modified. Opportunities like the present, for revising our legislation on the monetary system of the country, occur only periodically, and it is in my opinion, most important that on such occasions the advance which has been made in the interval should be marked, and the principles on which the monetary system of the country is to be founded should be laid down by high authority in the Legislature. Nor, indeed, do I know how we can judge of the merits of the plan of the right hon. Gentleman, unless we have a clear conception of the end to be aimed at. His plan is calculated to attain a certain object, and unless we know on what principle the paper circulation of the country is to be regulated, we cannot judge whether the scheme proposed is likely to answer the purpose for which it is intended. I am sure that no one who has read, as it was in a great measure my duty to do, any number of the frequent pamphlets which have teemed from the press upon this subject, can avoid having been struck by the utter confusion which has pervaded the discussions, from the absence of any agreement on the principle which should regulate the currency. The Bank of England has been attacked on one principle, and defended on another. So have the country issuers; and the result of all the arguments one way or the other has frequently been most unsatisfactory, because the various disputants were aiming at different ends, and tried the conduct of the banks by different tests. It is also the more necessary to lay down the principle on which the Measure is to be founded at the outset, because it is clear that the real difference of opinion will not be on details, wil not be on any minor point; if I may say so, on any minor principle, but will, in fact, be on the great fundamental principle of the strict adherence at all times to a metallic standard. The Act of 1819 commonly known by the name of the right hon. Gentleman opposite, which restored our currency from the depreciation of the suspension of cash payments, determined, I apprehend, three things.—1st. The re-establishment of a metallic standard. 2nd. That the standard should be of one metal; and that metal, gold; and, 3rd—it determined the rate at which gold should be coined. Upon the first point every body was agreed, and rendering the notes convertible into coin at the will of the holder was supposed to be enough to attain this object. The other two points were the subject of more difference of opinion. The right hon. Gentleman has to-night expressed his hope that Parliament will not attempt to depart from the single gold standard, and in that hope I cordially concur, as I can foresee much mischief and confusion, and no advantage which could arise from doing so. I am aware that a double standard of both gold and silver has been advocated by high authorities; but I must say, with very inadequate arguments. It would introduce great uncertainty into our metallic circulation, which at one time might be chiefly of gold, and at another time of silver. Besides all the inconveniences of the change, the nation would, on each alternation, be put to the expense of a new coinage. The two metals continually vary in their relative value to each other, and as it became more advantageous to demand one than the other, the amount of the first in the country would be increased, and the other would be exported. We have the best proof of this from experience. It actually happened in the reign of James I. At that time this country had a double standard. In the early part of his reign the gold coin had been exported, and a very small quantity of it was left in circulation. He raised by proclamation the value of the gold coin; and the effect I will state, quoting from the treatise on coins, by Lord Liverpool:— "It is observed by Mr. Munn that this last raising of gold did bring in great store thereof, more than we were accustomed to have in the kingdom; but that it carried away all, or the most part, of our silver.'' In the next reign, it is mentioned by Rush worth that very great inconvenience arose from the scarcity of silver. An alteration in the market price of gold and silver might produce the same effect as is here described. First, gold was exported, whilst the silver remained; and then all the silver was carried away, and the gold brought back. Throughout nearly all the last century, there was by law a double standard in this country, though the circumstance of the market price of silver being above the mint price for the greater part of the time, prevented its being carried to the mint to be coined; and, when, towards the close of the century, the market price of silver fell, and some silver was brought to the mint to be coined; the Legislature interfered and passed an Act of Parliament to suspend the further coinage of silver. Since the restoration of cash payments, the Government of this country has not restored silver as a standard, from a due sense of the inconvenience which past experience shews to have resulted from the double system. There is more to be said for a single standard of silver. It has been adopted as the standard in most other countries. There might be some advantages in having the same standard as those nations with whom our chief commercial intercourse exists, but none, I think, which would justify a change. Gold has been, as I have already shewn, practically the standard of this country, since the commencement of the last century. It was better, therefore, to restore that standard which had prevailed so long. The chief advantage of a standard is its being as nearly invariable as possible. Gold is, I believe, upon the whole, more invariable in value than silver, and is, therefore, better adapted for this purpose. This circumstance alone is a sufficient reason for adhering to our present standard of gold. I believe, however, that most of the advocates of a silver standard have recommended the adoption of it, with the view of effecting some gradual depreciation. There is no doubt that, looking back for some centuries, silver had fallen in value considerably as compared with gold. In the time of Henry IV. gold was reckoned to be to silver as 1 to 10; Elizabeth 1 to 11; James I., 1 to 12; Charles II., I to 14; and at present 1 to 15 and a fraction. It is evident, therefore, that if the standard of this country had been silver during the whole of this period, the metallic currency would have been more depreciated than it has been with the gold standard. It is, however, very questionable at present, whether the value of gold may not be expected to fall more than that of silver. The annual supply of gold, according to the most recent calculations, exceeds the annual consumption, and this must ultimately diminish the relative value of that metal. According to the calculations in the recent edition of M'Culloch's Dictionary of Commerce, the annual supply of gold from America, Europe, and the Russian Empire, amounts to 9,050,000l. The consumption in the arts, &c, is calculated at 6,050,000l., from which one-fifth must be deducted, as probably supplied by the fusion of old plate, leaving 4,840,000l.; to this must be added 1,600,000l. for the annual consumption in wear and loss of coin, making together 6,440,000l. for the whole annual consumption of gold. There remains, therefore, an amount of 2,610,000l., which is annually added to the stock of gold. Part may be sent to the East; but at any rate, the quantity of gold is increasing annually; and it does not appear that this is the case with silver. I do not myself believe that such an addition as this will for years produce any very perceptible diminution in the value of gold; neither am I an advocate for depreciation; but it is well that those who advocate a silver standard with such views, should be aware, that their object might not be attained by changing the standard to silver. The third point in 1819 was the rate at which gold should be coined. It was then determined that the old standard should be restored, of 3l. 17s. 10½d. per ounce. This is the common, though not a very correct way of stating the fact. The standard unit in our currency is the pound sterling; and the correct mode of stating what the standard is, would be to say, that the pound sterling was the value of 5 dwts. 3·274 grains of gold of standard fineness. This is, at the present time, the legal standard of this country, and by that, I trust, we shall abide. No doubt, some hardship was inflicted by the restoration of cash payments on those who had borrowed in a depreciated currency, and were compelled to pay their debts when the value of the pound was increased. I will not go into that question, because it is confined to those who borrowed between 1797 and 1819, to part of the National debt, and, perhaps, to some existing mortgages. With respect to all transactions begun since 1819, it evidently is a matter of perfect indifference what the standard is. They have been commenced, carried on, and concluded under one and the same measure of value, and no hardship whatever has arisen from this cause, to those who have engaged in them. I do not, however, anticipate much opposition or even discussion, on these two latter grounds. Of all the witnesses who appeared before the Committees on Banks of Issue, one gentleman, and one alone, gave evidence which was in favour of an alteration of the standard; that was the hon. Member for Birmingham, (Mr. Muntz). He proposed a considerable alteration of the standard: I will read his proposal to the Committee;—he said, in answer to questions which were put to him:

^*From a Corrected Report.

"I should substitute such a standard as would keep the price of corn at the necessary price to produce remuneration to the farmer and rental to the landlord.

"The remunerating price of corn, (he stated), depended very materially on the liabilities of the landlords."

And he subsequently said that his proposal involved

"A depreciation of the standard to the extent of 50 per cent."

I cannot say that I am much alarmed at this proposition, because I doubt whether any person can be found to agree with the hon. Gentleman; perhaps one of the twin authors of the Birmingham Letters may do so; but I do not believe that he would find a seconder in this House, who would recommend to Parliament a depreciation of the standard on grounds so uncertain, and to so enormous an extent. We return then, to the greater question, whether we are to adhere at all to a metallic standard; whether a standard pound is to be 123 grains and a fraction of gold of a certain fineness? or something else not very easily defined? It is admitted that an over-issue of paper may affect the standard; and the practical question may be stated to be, whether an unrestricted issue of paper, subject only to convertibility, will prevent an over-issue, will preserve the standard as invariable as the nature of things will admit; or, whether it is necessary, by some further regulation, to enforce more constant identity between the value of the pound in paper and coin, with that of 123 grains of gold, the standard pound. The former opinion is held by those who advocate what they call by the specious name of "free-trade in banking." Now, to free-trade in banking, distinguishing the business of banking from the practice of issuing notes, I am as friendly as they can be: but I cannot concur in their doctrines as to the mode of regulating the paper currency of the country. It is the fairest way always to state a doctrine in the words of its advocates; and I will, therefore, quote some of the answers of Mr. Gilbart, the manager of the London and Westminster Bank, a very intelligent witness who appeared before us, and displayed great practical knowledge of banking business. He advocates the doctrine of free trade in banking, with a view to the maintenance of an invariable standard. He says—

"I wish the circulation of the Bank of England, like that of the country banks, to be regulated by the demands of trade, for I think it necessary to keep the standard of value at as fixed and invariable a rate, as far as can be, as the yard measure, or the bushel measure."

"I consider that when the circulation is issued only in compliance with the demands of trade, though it will fluctuate in amount as the quantity of commodities fluctuate, or as circumstances may cause an advance of prices, yet it will not in that case fluctuate as a measure of value."

He was then asked—

"But what test do you apply to ascertain whether your currency has fluctuated in value or not?"

His answer was—

"I judge of it by the circumstances in which it is drawn into circulation."

In this exposition of the doctrine of free-trade in banking, the necessity of an invariable standard is maintained; and their mode of preserving it invariable is pointed out. It is only required in order to prevent an over issue of paper from affecting the standard, that the notes should be issued in compliance with the demands of commerce. This doctrine is firmly held by all country bankers as to their own issues, and in a recent pamphlet of Mr. Tooke, it is asserted as strongly of the issues of the Bank of England. Mr. Tooke holds, indeed, that the notes should be convertible; and Mr. Gilbart, in another part of his evidence, speaks of convertibility operating as an unseen cause to prevent excess: but it is difficult to see where any notion even of convertibility eaters into the only condition necessary to prevent over-issue—namely, an issue to meet the demands of trade. Now this was precisely the doctrine held by the Bank of England during the suspension of cash payments. It was then maintained that so long as their paper was issued on good mercantile security, in compliance with the demands of commerce, it was impossible that there could be an over-issue, or a depreciation of the standard. Nobody now entertains a doubt but that there was an over-issue of Bank paper, and that the over-issue produced a depreciation during that period. Those who maintain the doctrine of free-trade in banking, at the present day, offer no better security than existed then, and if their views should be adopted, we should have, therefore, no security at all against over-issue and depreciation. But we are not without experience as to the value even of convertibility, as a safeguard for the preservation of the standard. Let us look to experience in this country, and still more to that of the United States of America, and we shall see what has been the effect of unlimited competition in issues, and free-trade in banking, subject only to convertibility, in maintaining the standard, and preventing ruin and national bankruptcy. In America the convertibility of bank notes is a fundamental article of the Constitution; provisions more stringent than in this country are enacted to enforce it in practice; every precaution is taken to render the banks safe and sound. They are all joint stock banks, with limited liability and restrictions on issues, paid up capital, and whatever other precautions can be devised for this purpose. I am indebted for this statement to the pamphlet of my hon. Friend the Member for the Tower Hamlets (Sir W. Clay). What has been the result? In the year 1830 there were 329 banks, with a capital of 145,000,000 dollars, circulation 61,000,000 dollars. In seven short years, on the first of January 1837, there were 677 banks, besides branches, with a capital of 378,000,000 dollars, and a circulation of 186,000,000 dollars. The number of banks had more than doubled, their issues had been more than trebled, and the result is concisely summed up by my hon. Friend—

"In May of that year, cash payments were suspended throughout every State in the Union."

There was an end, of course, of any maintenance of the standard of value, and wide-spread ruin desolated that country from one end to the other. Let us now turn to what occurred in England in the year 1839. We were not quite so far from such a state of things, as at this hour, when the danger is past, we are apt to imagine. A heavy drain of gold had gone on for some months, and had brought the Bank treasure to a very low point. It was only checked by an extraordinary operation on foreign credit by the Bank of England, to the full amount of the bullion which remained in its coffers. It was an operation which brought this country into some discredit abroad, but it prevented the exhaustion of the treasure of the Bank. I do not mean that the Bank might not have done so by other measures, or that under almost any circumstances the Bank may not maintain the convertibility of its notes against the danger arising from a foreign drain, but it might be by measures of such severity, as would entail the most calamitous consequences. The drain, however, was stopped by this measure of the Bank. It was owing to the great resources and power which the Bank possesses that they were enabled to do so. I believe it to have been owing to this alone that we were saved from the evil consequences which might have occurred in this country, from an over-issue of paper, as they did in America, where this check and controlling power of a central issuer did not exist. We were, nevertheless, brought into a state which justly caused the most serious alarm for the safety of our monetary system. The advocates of these doctrines attribute little or no importance to large issues of paper, but it is not a little remarkable, and well worth their attention, that immediately previous to the two last drains of bullion, the aggregate circulation of the country had reached an amount before unknown, at least as far as the returns go back. The first of the two drains began, to any serious extent, in the spring of 1836, and for the first time since 1833 the aggregate circulation exceeded 39,000,000l. in April of that year. The second drain in like manner commenced, seriously, towards the close of 1838; and again, for the first time since 1833, the aggregate circulation had exceeded 40,000,000l. in October of that year. No doubt, in both cases, there may have been other more immediate causes for the commencement of the drains; but looking to what has taken place in other countries, and at other times, it is impossible to believe, that the immense amount of paper circulation at those periods did not materially contribute to produce, and also to prolong the evil. It seems, therefore, both by the experience of America and of this country to be proved to demonstration that mere convertibility is not enough to ensure a practical maintenance of the standard, and that further regulations are necessary for this purpose. There are some persons who, feeling the difficulties of adopting adequate regulations, have advocated either a currency exclusively metallic, or a reserve of bullion so large, as to neutralize one of the great advantages of paper money. It would be exceedingly absurd, however, to conclude that, because an ill-regulated paper circulation has produced some evils, the use of paper money is not a great and permanent benefit. It is enough to mention its convenience and cheapness; and on these grounds alone, it is one of the greatest improvements o modern ages to substitute, to a considerable extent, a paper for a metallic currency. The real question to be solved is, how to regulate the quantity of the paper circulation, so as to keep its value identical with what the value of the metallic currency would be. It is not necessary, perhaps, that a paper circulation should be of precisely the same quantity, as the metallic currency, which would be required, if the paper did not exist, because the greater convenience of paper money may render it possible that the same functions shall be performed by a less quantity of paper as easily as by a greater quantity of gold or silver. If this be so, still the amount of the paper would in this case be in some definite ratio to that of the gold or silver. The question, however, as to the regulation of quantity relates mainly to the fluctuations in the amount of the circulation from time to time, according to the varying demands of trade and commerce. The essential point is, that in all these fluctuations the quantity of the paper should so vary as to preserve its value in the same manner as would occur in a metallic circulation. It is evidently important, with the view of ascertaining how this can be effected, that we should know what it is that determines the quantity of a metallic circulation. It must necessarily vary in amount, according to the different wants of the community at different times. What is the principle, then, which maintains the proper quantity at all times? I will suppose the simplest case, when everybody may obtain coin for bullion, free of charge, as in England, and where there is no obstacle to melting the coin. It is obvious that in such a slate of things, everybody who feels the want of more coin must carry a certain quantity of bullion to the Mint. In order to obtain a greater quantity of the circulating medium, he must make a previous sacrifice of a certain amount of capital in order to procure it. By making that sacrifice he can obtain as much as he requires. Every individual can best judge for himself whether it is most for his advantage to retain that portion of his capital to be employed with a view to profit, or to convert it into coin for the purpose of facilitating the exchange of the commodities in which he deals, and of aiding his general commercial transactions. His own interests will induce him to sacrifice as much of his capital for this purpose, as is necessary for his business, and no more: on the other hand, any individual who possesses more coin than is necessary for carrying on his trade, may convert it from its state of coin, and apply the capital again to profitable employment. This is, of course, true of the whole community, as of individuals: and with a metallic currency, or indeed with any currency possessing intrinsic value, that object is attained by the self-interest of the community, which no law and no discretion can accomplish; namely, the precise quantity of money required for the wants of the community is practically and at all times determined. If the increasing demands of commerce require a larger amount of circulating medium, it is for the interest of the community to divert a larger quantity of their capital for this purpose, and to procure the bullion from the supply in the market: if, on the contrary, the state of trade is such as to require less, a portion of the coin is withdrawn, and applied as any other commodity for the purposes of commerce. One of the advantages of a paper currency, is the saving effected to the community, to the extent that a cheap material like paper, can be substituted for the precious metals; and that amount of capital rendered available for profitable employment. But unless a paper circulation is subjected to the same limitation on its issue, as exists in the case of a metallic currency, the variations in its amount will not conform, as those of the metallic currency do, to the wants and demands of the community. In order to do this, the variations should correspond in time and amount with those which would have taken place in a circulation consisting of the precious metals. It is obvious that convertibility alone will not ensure this. Convertibility provides, indeed, the means of taking out of circulation a quantity of paper already in excess; but it imposes a very imperfect check on putting too much paper into circulation. No doubt, there is the fear of the ultimate consequence, the fear of having, some time or another, to provide for the amount of paper issued. This feeling, however, has reference rather to the solvency of the party, and the extent of his capital, than to the quantity of circulating medium which is wanted. It has already been shown that convertibility is not an adequate security against over-issue. The increase of notes therefore ought to be subjected to the same check as operates on the increase of a metallic circulation, that is, a previous sacrifice of capital in a deposit of bullion, to the extent of the increase of paper. This will not prevent either an increase or decrease of circulation, according to the varying demands of trade, or according to the natural rise and fall of prices. Prices will rise as before, and the rise will be accompanied by an increase in the circulation, but that increase will not go beyond what is legitimately called forth by the rise from natural causes. Prices will not be unduly forced up by an over-issue of paper, or unduly kept up by the same means, till in the end a fall takes place to an extent disproportionate to the real state of trade, and unnecessarily severe in its pressure. I cannot imagine any other means, by which the proper quantity of circulation for the country, can be determined, than by this self-regulating principle, depending on the interest of every individual in the community. The discretion of the Government cannot do it; nor the discretion of the Bank of England, nor the discretion of all the banks together. The rate of interest has often been taken as the test of excess or deficiency in the amount of circulation. It has in fact nothing to do with it. It shews whether capital is abundant or not, whether there is much unemployed capital or little to be had in the money market; but it is no criterion whatever as to the amount of the circulation. Nothing can prove this more completely than the fact that at various periods a low rate of interest has existed with a low circulation, and a high rate of interest with a high circulation. Thus,

"During the period of the Bank Restriction, when there was no question that the amount of issues produced a depreciation of from five to twenty per cent, the rate of interest was high.'

It fell when cash payments were resumed, and the Bank issues were reduced. I am quoting a statement from Mr. Norman's pamphlet.

"In 1822, 1823, and 1832, the general circulation was low, and the rate of interest was low also. Towards the end of 1824, and the beginning of 1825, and again in 1836, anterior to any contraction, and when confessedly the circulation was very high, the rate of interest rose."

It is needless to say more to prove that the rate of interest is no index of the amount of circulation. It seems, then, to me, to be beyond dispute that the only course which will properly regulate the issues of paper-money is, not only to make it convertible, but to require, previously to any increased issue, a deposit of bullion. This ensures a variation in its amount to the same extent, and at the same period, as would take place in a metallic currency, and secures at the same time all the advantages which undoubtedly belong to a circulation composed in great part of so cheap and convenient a material as paper. It is, Sir, almost unnecessary to say that such has not been the system on which the paper circulation of this country has been regulated. Up to the year 1819, it was avowed by the Bank that they could see no reason for any such course, as a reference to the state of bullion, or to the exchanges. Even later than that period it was held in the Bank parlour, as it is by many even now, that to issue paper on good commercial security was all that was necessary to ensure a proper amount of paper being in circulation. In 1832, immediately previous to the last renewal of the Bank Charter, a new rule was laid down, commonly called the rule of 1832. It made an approach, though in appearance more than in reality, to sound principle. The affairs of the Bank being in a proper state (and they were so in 1833), the securities were to be kept even in amount; " the circulation of the country, so far as the same may depend upon the Bank, being subsequently regulated by the action of the foreign exchanges." Nothing could sound better than this. It was a perfect rule for the management of issues, but was utterly inapplicable to a bank which was a bank of issue, and also of deposit. This has been so ably demonstrated by authority much higher than mine, that I will not add an argument on the subject. Indeed, the most convincing proof, is the fact, that from the time of the promulgation of the rule in 1832, up to the period of our inquiry, in 1840, in no one single year did the Bank ever adhere to their rule. There were invariably some special and extraordinary circumstances which caused a departure from it. In 1834 and 1835, there were the East India Company's loan, and the West Indian loan; in 1836 and 1837, the advances in support of credit, and the subsequent running off of the commercial securities then taken; in 1838, the wilful exportation of gold to the United States; in 1839, the discredit and drain; in every year there was some such cause or another, and, as I have said, in no one single year did the Bank adhere to its rule. I, by no means, blame them for doing so, far from it; the fault was in the rule, which was not applicable to a bank which received deposits. Of course if these deposits increase, they must invest the greater portion of them in securities, and thus the securities increase without any reference to the circulation; and if the deposits are withdrawn, the securities must decrease likewise. It is, however, very remarkable, how utterly the rule was practically departed from, if the variations in what had been called " the elements of the Bank's position" are examined. It is notorious that the amount of circulation and securities, &c. varies a good deal in each quarter, owing to the payment of dividends. There is, however, in the Appendix to the Report on Banks of Issue in 1840, a return of the average circulation, securities, &c. in each of the quarters of the year. This statement will convey a fair impression of the conduct of the Bank, because each quarter embraces a period of payment of dividends. The return begins with the first quarter of 1832, and ends with the first quarter of 1840, a period of eight years, during which, according to some of the Directors, the rule was in full operation. In that period the difference between the highest and lowest amount of deposits was, 12,384,000l.; securities, 10,804,000l.; bullion, 8,178,000l.; whilst the difference between the highest and lowest amount of circulation is only 3,334,000l.; the securities which were to have been kept even, varied to the extent of nearly 11,000,000l. and the circulation which ought to have varied with the influx or efflux of bullion, varied only to the extent of rather more than 3,000,000l. The result of the action of the Bank was to keep their circulation even, and to let. their deposits, securities, and bullion vary. I repeat, Sir, that I do not mean, or wish to blame, the conduct of the Bank Directors for this. On the contrary, they were perfectly right in departing from their rule; but the consequence is, that there has been, and is, no rule at all for the regulation of their issues. I believe that the Bank has always been more acted upon than active. Their rule arose out of their practice in ordinary circumstances, when there was no pressure upon them; and as soon as extraordinary circumstances came, it was found utterly impracticable, and they very properly departed from it. The measure of the right hon. Gentleman takes away all discretion from the Directors as to the issues, and therefore it is altogether unnecessary to go further into the past conduct of the Bank. I will only say, that the more we inquired into the conduct of the Directors in the management of the Bank affairs, the more I was convinced of the injustice of the greater part of the charges which had been made against them; i was convinced that whatever they did, they did in the belief that it was for the best for the public interest, and above all I believe that they have not been swayed by any considerations of their mere private interest. It is true that what they believed to be for the benefit of the public was often at the same time for their own private advantage, but I entirely believe that they were actuated by their conviction of what the public interest required. I must beg, Sir, also, in commenting upon the conduct of the country bankers, to be understood as not intending to express my blame of their conduct. They acted upon no rule, they did not profess any. The witnesses who were examined denied that they had any control over their circu- lation, and of course they had it not in their power, according to their own view, to act upon any rule. Mr. Hobhouse said, in answer to a question on the subject, " we never pretend to exercise any power over the circulation." Mr. Stuckey also gave an answer to the same effect. He was asked, " what determines the amount of your circulation?" His answer was, The demand for it." And Mr. Rodwell, a very intelligent banker at Ipswich, was also asked a similar question, "Do you conceive that the amount of your issues is regulated only by the demand of your customers for the purpose of transactions in agriculture?" To which he answered, "Solely by that, and by the demand of our other customers in their ordinary affairs." It is quite unnecessary to push the proof further. The country bankers generally disclaimed all reference to the exchanges, and Mr. Stuckey, the only one who professed ever to regard them, declared that he did not see how he could regulate his issues with reference to them. The result therefore is, that neither the Bank of England nor the country bankers acted upon any rule or principle in their issues. They answered the demand for their notes on such security as satisfied them. I will not trouble the Committee at length upon the effect of such a system, I will merely read to them a summary account of the management of the circulation during the last drain in 1838–9, which appeared in a pamphlet published in the early part of 1840. The account was compiled from quarterly statements of the amount of circulation, and is therefore subject to some slight corrections which are, however, immaterial as to the accuracy of the general result, and I shall quote therefore the words of the pamphlet. It appears from this table that

"The bullion was at its maximum in March, 1838, and continued to decrease steadily from that time. The Bank circulation and the aggregate circulation continued to increase largely till September, 1838. The country issues continued to increase largely till June, 1839, and it is remarkable that they were at their minimum point, when the bullion was at its maximum (March 1838) and they advanced to their maximum point, whilst the bullion was undergoing a decrease of 60 per cent., (June 1839). Whilst the bullion is reduced uninterruptedly from 10,000,000l., to 2,800,000l., that is, 72 per cent., the aggregate circulation is reduced very irregularly, less than 500,000l, i. e. under 2 per cent. Even that reduction is effected only in the last quarter. From March 1838 to June 1839, the aggregate circulation is increased 850,000l., or nearly 3 per cent. whilst the bullion is diminished 5,660,000l. or nearly 60 per cent."

Can anybody wonder, that under these circumstances this drain was so severe and so prolonged, and I need say no more at to the utter absence of all principle and all rule in the management of our circulation. I will not enter at present into the management of the issue of the Scotch and Irish banks, they are not included, except in a very trifling degree, in the present proposal of the Government. I apprehend that their issues were, generally speaking, managed much upon the same system as those of the bankers in England, as indeed is evident from the Scotch and Irish witnesses whom we examined. This, then, being the state of things up to the present moment, it will not be maintained that the existing system has carried out what I believe to be the sound principles of currency, which the right hon. Gentleman laid down in his speech, and on which I have attempted to state, though very imperfectly, my own views to the Committee. It remains to be considered what regulations should be adopted by the Legislature for the purpose of carrying those principles into practical execution. Sir, I believe that the simplest and most advantageous mode of doing so, would be by adopting a national issue for the whole kingdom, managed by public officers, but not dependent on the Executive Government. Their duty would simply be to exchange notes for bullion, and bullion for notes. The public would have the guarantee of the nation for the greater part of the notes, and the remainder would be issued upon bullion. The amount of notes would vary, precisely as the amount of a metallic circulation would vary. The nation would enjoy all the profit from the issue of paper, instead of being put to the expense, as at present, of defraying the cost of coinage; nor have I ever heard any argument to show that the privilege of issuing paper money, as well as of issuing metallic money, ought not as properly to be reserved to the State. Both seem to me, in principle, to stand on the same footing; and this is undoubtedly the plan which I should prefer. At the same time, I am not insensible to the advantages of working with known machinery, especially at the time of at- tempting a great change. It is a very important object to conciliate those parties who might have strong reasons for opposition, and to reconcile bodies interested in the old system, to co-operating in bringing the new one into play. These advantages are all attained by the plan of the right hon. Gentleman, whilst it is based on sound principle, and, as far as it goes, carries that principle into effect. It is avowedly imperfect, for it does not extend to the circulation of Scotland or of Ireland, but it places that of England on a proper footing; and the right hon. Gentleman is fully entitled to the credit of having brought forward an eminently practical and practicable plan. He has availed himself of the most favourable opportunity that has occurred for years. There never was a time so remarkably favourable for any plan of this kind. The great amount of disposable capital, the large stock of bullion, the low rate of interest, are all circumstances which combine to lessen any difficulty which might arise in effecting so great a change in the monetary system of the country, and to prevent any of that pressure, which some persons, needlessly, I think, anticipate. The right hon. Gentleman has truly described this measure as the complement of the Act of 1819; and amongst the many claims which the right hon. Gentleman possesses to distinction, none will afford him greater satisfaction, than that his name will be identified with the two great measures for restoring our currency, and placing it upon a proper basis. The plan of the Government divides the Bank of England into two departments, one of issue and one of banking, perfectly distinct from each other, and under different management. The banking department is to be, as it ought to be, perfectly unfettered in its operations, subject only to a weekly publication of its accounts. The debt of the Government to the Bank, of 11,000,000l., and 3,000,000l. of saleable Government securities, making altogether 14,000,000l., are to be transferred to the issue department, and 14,000,000l. of bank notes are to be issued to the banking department on this security; all notes beyond this amount are to be issued only on the deposit of bullion. There is an exceptional case, of a power to issue notes on the deposit of securities, under particular circumstances, to which I will advert by-and-bye. The amount of country bank-notes, is to be limited to the average of the last two years, which is about 8,000,000l.; so that the aggregate circulation of England and Wales will be a fixed amount of 22,000,000l., and everything beyond that will be issued only on bullion deposited, with the free power of demanding notes for bullion, and coin for notes. The system will be as perfect as possible for this part of the Kingdom, and in strict accordance with sound principle. The right hon. Gentleman has announced to-night an alteration which has removed one objection which I felt to the plan as originally developed. He stated, on this day fortnight, in answer to a question from myself, that although the banking department might demand notes for bullion, yet that the public might demand them only for coin. Now, subject to some limitation as to the price of bullion, the public ought to have a right to demand notes for bullion, and this the right hon. Gentleman has to-night stated it to be his intention to propose. It is clear, that upon the principle of a self-regulating currency, everybody ought to have the power of obtaining money by bringing bullion to be coined, as he may do, by law, in this country without charge. The policy, however, of using paper money is to avoid the expense of coinage, and that arising from the wear of the coin. Everybody, therefore, ought to be able to obtain notes on the same terms as he can obtain coin as nearly as may be, giving just such an advantage in favour of taking notes rather than coin, as may induce everybody to do so. I believe that 3l. 17s. 9d. is the price per oz. for standard bullion, which has practically been sufficient to induce persons to sell bullion to the Bank for notes, rather than to take it to the Mint to be coined, and the right hon. Gentleman has therefore properly fixed upon that sum as the rate at which persons may demand notes from the issuing department in exchange for bullion. If the public had not this right, the banking department might exercise a power of limiting the circulation of notes which it ought not to possess. I am aware that objections have been entertained to this power, on the ground that a great deal of gold bullion comes to this country merely as a commodity for the purposes of trade; and that there is no reason why notes to this amount should be added to the circulation, as would be the case if it was carried to the issuing department. In the first place, I do not believe that a great quantity of gold does so come to England. Silver comes here in large quantities from America to be exported to other countries, but I understand that not much gold is brought to this country for that purpose. It is evident, besides, that if it does come for such a purpose, it must be exported again very soon. There can be no material difference between the imports and exports; and for the supply of trade it must go out as fast as it comes in. Indeed, as the Bank has for some years always purchased gold bullion, when offered, at this price, it is certain, that any inconvenience which can arise from this source, must have been felt for some time, and yet I have never heard of any complaint on this ground. But the price at which the bullion can be taken to the issuing department, is a check sufficient to prevent anybody taking it there unless he wants the notes; for he must sell it at the rate of 3l. 17s. 9d., and can demand coin again only at the rate of 3l.17s. l0½d. The same difference in price obviates also a further objection on the ground that the public might be charged with a constant expense of coinage, if a party was one day to deposit bullion, and the next to demand coin. The right hon. Gentleman has anticipated on another point, a question I was about to put to him, i. e. whether the Issuing Department is to hold a part of their bullion in silver. He has told us to night, that he proposes that they may hold silver to an amount not exceeding one-fourth of the gold which they may have, that is one-fifth of the whole amount of their bullion; but that they must take it at the market price of silver at the time, and sell it in the same way, being themselves responsible for any loss which may occur in the transaction. I approve of the course which the right hon. Gentleman has proposed. The Bank has always been in the habit of holding a certain quantity of silver, sometimes to the extent of upwards of 2,000,000l., and for the purpose of export and of rectifying the exchanges, it is often more available than gold. By allowing the Issuing Department, then, to hold a certain quantity of silver, a great facility will be given for working the new system. The practice which has hitherto been found so advantageous at different times will be continued, and when there is some apprehension afloat of the pressure which the new plan may entail, I am glad to afford every facility which is not inconsistent with the principle of the Measure. The regulations as to the amount of silver, and mode of exchange for notes, prevent its interfering in any way with the gold standard. Silver cannot be given in exchange for notes, unless the party holding the notes applies for it in preference to gold, and then he will only take it at such a price as he agrees to himself. The power of demanding gold for notes remains untouched; and if the Bank has to part with silver in order to obtain gold, the loss will fall on themselves. I come now to another part of the plan, on which at first I entertained some apprehension; and though upon the whole, subsequent consideration has re-assured my mind, I am not altogether without some misgivings. That is, as to the amount of the securities on which notes are to be issued. The higher the amount of securities, the less, of course, will be the margin for bullion; and I was afraid, that in certain circumstances, such as have occurred before, there might be a less amount of bullion in the coffers of the Bank, than I should wish to see. I will explain what I mean by reference to the state of the Bank circulation on two occasions. In December 1839, and again in December 1840, the circulation of the Bank of England was, in round numbers, 15,500,000l. But I apprehend that some deduction would have to be made from that amount, if the account had been made out, as I conceive it will be, under the proposed plan. In that account there are included the Bank post-bills. The right hon. Gentleman has not said if they are still to be considered as circulation as heretofore. [Sir R. Peel.—Bank post bills are to be looked upon in the light of bills of exchange, not being payable to bearer, and they will be left to the banking department.] So I had concluded. They will not appear, then, in the amount of circulation: and if the accounts in 1839 and 1840 had been made out on this principle, the amount of circulation would have been less by the amount of the Bank post bills then in existence. There is, besides, a considerable amount of notes included in the published returns, which there is every reason to suppose have been lost or destroyed; and probably it will be well to take this opportunity of writing off that amount in the returns. I believe that these two items, the Bank post bills, and the lost notes, will amount to about 1,500,000l. If this sum be deducted from the 15,500.000l., there will remain only 14,000,000l.; and on those two occasions, therefore, there would, in fact, have been in circulation with the public, only the precise amount of notes which are to be issued on securities. There would, in that case, be no bullion in the issuing department, except that which was equal to the bank notes held in reserve by the banking department; and there would be also in the banking department the coin which they kept in reserve to answer the demands of their customers in London, and at the branches. I will assume that this altogether may be 3,000,000l., or perhaps rather more. This is rather a small amount under circumstances which may arise, and which we must not shrink from contemplating. I have no fear of a foreign drain. Before the bullion was reduced so low as this, the increased value of money would, I have no doubt, have checked the export; and I have no apprehension on that ground. But the same circumstance has no effect on an internal drain, which often arises from panic, or other causes not amenable to reason. We had experience of a drain from political causes in May 1832. In his evidence before the Committee which sat in that year, Mr. Horsley Palmer gave the following account of the extent of that drain:—

"The issues to the branch banks and to the bankers, were together about 800,000l.; the issue to the public at the counter of the Bank, was about the same amount, making in the whole about 1,600,000l.; and in addition, the sum that went out in dividends, has not returned: therefore, I believe the whole absorption at the present time (the evidence was given in May, 1832) to be near 2,000,000l. sterling."

Now, the greater part of this sum was drawn from the Bank in the space of a single fortnight; and it is evident that a drain such as this, which cannot be foreseen or guarded against, if it occurred at a period when the bullion in the issuing department had been very much reduced, might place our monetary system in great jeopardy. On the other hand, I am confident in the expectation, that the result of the proposed system will render it extremely improbable, that the bullion ever should be reduced so low by a foreign drain. It is improbable, too, that the internal panic should arise at the moment of the reduction of bullion by a foreign drain, though, to a certain extent, the very knowledge of the low state of bullion, from the publication of the state of the Bank, may excite some alarm. At the time when the circulation was reduced so low, in 1839 and 1840, the exchanges were in our favour, and there was on both occasions, about 4,000,000l. of gold in the coffers of the Bank. It must be remembered, also, that if the contemplated power of substituting Bank of England notes for country notes, partly on a deposit for securities, and partly on a deposit of bullion, be exercised, the quantity of bullion, in the coffers of the issuing department, will be considerably increased; and, as an internal drain can only be stopped by actual payment of coin over the counter, it is more to the positive, than to the relative, amount of gold that we must look. These considerations have very much diminished the doubts which I entertained, at first, of the possible sufficiency of the amount of bullion; and I am, upon the whole, disposed to think, that the right hon. Gentleman is safe in allowing the issue of notes on so large an amount of securities as 14,000,000l. I will now refer to what will appear to be the state of the circulation in the first published accounts under the new system; because there will be a very large apparent increase of circulation, and it is most desirable, that the public should be previously warned of this, as, otherwise, it might create considerable alarm and uneasiness:

Of these, 14,000,000l. will be issued on securities, and there will be required 5,500,000l. of bullion to be deposited with the issuing department to obtain the whole amount. The banking department will then require its ordinary banking reserve, say 3,000,000l., for which it must deposit 3,000,000l. more of bullion, making altogether 8,500,000l.:—

There will then be 6,500,000l. of bullion on which the banking department may obtain notes beyond those already issued to the public, and its ordinary banking reserve. If they deposit, as probably they will, this whole amount, their banking reserve in notes will be 9,500,000l. and this sum will appear in the returns of the issuing department, as an immediate increase to the circulation. It is most desirable that the public should be apprised of this, and that the increase, which would otherwise look startling in amount, is, in fact, apparent rather than real. What the banking pepartment will do with the notes will, I apprehend, appear in their own published returns, and that publication will remove any unfavourable impression; but it is as well that the public should be made aware of the real state of the case at the earliest opportunity. I come now to a part of the plan, to which, as it was originally proposed, I certainly did entertain the very strongest objection. I mean the power of increasing the issue of notes on securities. The right hon. Gentleman proposed that the banking department might, with the sanction of three Members of the Government, by depositing with the issuing department a certain proportion of securities, and a certain proportion of bullion, obtain thereupon a further quantity of notes to the amount of the securities and bullion deposited. The right hon. Gentleman stated, that the only case in which he contemplated the exercise of such power, was the substitution of Bank of England notes for country notes, in the event of any quantity of the latter being withdrawn. I should not have objected to a provision being made for such a case. It was quite necessary to do so; but the power, as first stated, was perfectly general; and after the conclusion of the right hon. Gentleman's statement on the former evening, I had hardly got beyond the door of the House, when I heard that this power was, by some persons at least of no light authority, considered as affording a very convenient mode of increasing the issues on security, whenever such an increase might be thought needful. This seemed to me to be perfectly inconsistent with the very principle of the Measure, and calculated entirely to defeat its efficacy. Let anybody call to mind the state of things in the summer of 1839, when Mr. Horsley Palmer avowed that the Bank was utterly unable to resist the urgent demands for discount and accommodation to the merchants, and thus increased their issues at a time when their bullion was flowing fast out of their coffers. All this pressure would be transferred to the Government. Imagine such pressure applied to a weak Government, or to a Minister who held opinions on currency at all resembling those of the Gentlemen who advocate free-trade in banking. I should infinitely prefer seeing the discretion in the hands of the Bank, to seeing it in the hands of the Executive Government. The whole responsibility would then be upon the Bank; but if the responsibility were removed from their shoulders to those of the Government, I am afraid that the knowledge of the existence of this power in reserve might induce them to be less cautious, and would remove the necessity of that early prudence on which the safety of this, or, indeed, of any system, so essentially depends. Feeling this point so strongly as I do, it was with the very greatest satisfaction that I listened to the announcement of the right hon. Gentleman this evening, that he had made a great modification of his plan in this respect. He now proposes to limit by law the exercise of such a power to cases which all imply a withdrawal of country notes from one cause or another; to fix the proportions in which securities and bullion are to be deposited, in order to obtain a further issue of notes at two-thirds of securities, and one-third of bullion; the notes so issued to be substituted for the country notes withdrawn; and the whole to be done only with the sanction of the Queen in Council. If I understand this proposal rightly, it seems to me to remove the objection which I felt to the former proposal. I should be glad to reserve a final opinion till I see the provisions for this purpose in the Bill; but as far as I can judge, I am satisfied that the alteration effects what I consider to be indispensible to the proposed system. I do not see so strongly as the right hon. Gentleman does the necessity for the check on the part of the Privy Council. The reason which he gave for it was, that the banking department might deposit securities, and then obtain an additional issue of notes when they had already a large reserve of notes from which they might supply the deficiency created in the country circulation. It seems to me that they would have no inducement to do so. When they substitute their own notes for country notes out of their reserve, they enjoy all the profit which is derived from the issue of those notes; but if they obtain a further issue of notes under this power of depositing securities, the whole profit is to go to the Government. It is not easy to see how they will have much inducement to do this under any circumstances; but it is clear enough that they will have no inducement to do so, as long as they can supply the notes from their reserve. The check, therefore, seems to me to be unnecessary; but if there is any need for it, which has not occurred to me, the mode in which it is proposed to apply it is very unobjectionable. Speaking generally, the two alterations of to-night seem to me to obviate the only objections which I felt to the original plan. I quite enter into what fell from the right hon. Gentleman, as to the difficulty under which he laboured of not being able to communicate with parties, whose acquaintance with the subject might have enabled them to afford useful assistance to the Government, in framing their measure. Secresy was indispensably necessary; and it was not to be expected, that they should produce a plan devoid of all objections; but, considering these disadvantages, it is highly creditable to the right hon. Gentleman and his Colleagues, that they should have proposed a plan with so few faults; and which, now that the right hon. Gentleman has readily amended its defective points is, upon the whole, a very perfect plan, with the great advantage of reconciling the opinions and interest of the great bodies at present engaged in the business of banking and of issue. I do not see that anything more is required as far as regards issues in England and Wales. With respect to the banking department, there is very little to observe upon. It will be perfectly free in its operations; and almost the only point to which any remark need be directed, is the form of their published accounts. It is of importance, that we should have the amount of notes "with the public," distinguished from those which form "the reserve of the Bank," within the walls of the Bank. We should have the former, if only for the purpose of comparison with the amounts of circulation now published. It is very desirable too, that the public should know what is the amount of notes in reserve in the Bank. The Bank has an immense monied power, and with such a reserve as they happen to have at present, of 9,500,000l., they have the power of throwing into the money-market an amount that would derange the ordinary transactions. It is not likely that the present state of things should last long, or occur very often, but still it is desirable that the public should know what is hanging over them in the shape of the Banking reserve. It is also, I think, desirable, that the public should know the amount of the capital of the Bank. This has never appeared in the published accounts; but when the publication is to be made so frequent, so accurate, and so full, I think it will be as well that all the world should see that there is ample security for the safety of the public and of the creditors of the Bank. I should be glad to know if there will be any objection to giving the Bank the power of exchanging, from time to time, the 3,000,000l. of saleable Government securities, which the issuing department is to hold. I can see no objection to doing so. The security to the public will be the same, and it may be a convenience to the Bank to have the option of exchanging them. With these powers, I apprehend that the Bank of England will continue to perform all the functions which she has hitherto discharged with so much advantage and convenience to the public; as, for instance, making the quarterly advances at the payment of the dividends. There will be less need of this than before. I am glad to take this opportunity of expressing my approval, of the course which the Government took in reducing the 3½ per cents., of transferring the period of payment of the dividends on the new stock to the spring and autumn quarters. This will have the effect of equalizing the payment of dividends in the four quarters, and is a very judicious measure. In the same way the Bank will, I conceive, as heretofore, make advances on deficiency bills, and for rendering assistance to the trade of the country in periods of difficulty. There is no reason why this should not be done out of the capital of the Bank; and with proper caution and prudence, I believe no difficulty need arise. The only thing which has been to be deprecated, is when the Bank made the fatal mistake of substituting for advances of capital, increased issue of notes. I have heard objections made to the terms on which the Bank Charter is to be renewed. The right hon. Gentleman has been blamed for not availing himself of the present high price of the funds to pay off the 11,000,000l. due from the Government to the Bank. There has also been an objection stated to the proposal of leaving the Bank open at any time after the expiration of ten years to the termination of its charter, on a year's notice; and no doubt there is some objection to an annual discussion on these matters; but, upon the whole, I am not disposed to criticise any of these minor details of a great plan, which effects so important an object as to the circulation. There is one thing, however, which I thought would have been done, and on which I should be glad to hear some explanation. There seemed to be a general concurrence of opinion in the Bank committee of 1840, that it was advisable to introduce in some way, greater permanency into the direction of the Bank. I do not mean a Government officer: but no one who has so much experience in dealing with the Bank, as the Chancellor of the Exchequer, but must be aware that there is considerable disadvantage in the constant change of Governors. The necessity is assuredly much diminished, by depriving the Directors of any power over the issues; but as there was a general feeling in favour of a change in this part of the system, I am surprised that it has not been proposed. I will now refer to that part of the plan which relates to the country issuers. The amount of the circulation of each bank is to be fixed, at what has been its average circulation for the last two years. This is a low average, and I think it is quite proper that the amount should be fixed a a low point, in the same way as the amount of Bank of England notes to be issued on security is far below what they continually have in circulation. The objection which has been stated to their being tied down to the average of two years, on the ground that their circulation varies so much at different periods of the year, does not seem to me to be of any great force. I have referred to the account of the circulation of private Joint-stock banks for the last two years, and the result is as follows:—

Now, half this amount is given to them at all times by the Measure of the right hon. Gentleman, and therefore the power of increase of which they are deprived, is only to the extent of about 400,000l.; and this upon a circulation of 8,000,000l., is a sum too trifling for serious objection. The great opposition, however, to this part of the Measure, will, I conceive, arise from those Gentlemen who maintain that the unlimited power of issue on the part of the country banks, is absolutely indispensable for the benefit of the agriculture of the country, to enable the farmers to cultivate their ground, and to pay any rents to their landlords. Such a notion has been extensively propogated, but really when it comes to be examined, it is not only absurd, but actually contradicted by the evidence. The first proposition is, that the bankers cannot make advances to the farmers, if they are limited in their issues. Now, one of the most intelligent witnesses we had, was Mr. Rodwell, a country banker at Ipswich, and I will read three questions and answers from the evidence given by that gentleman.

"In what half year is your circulation the highest?—In the half year ending in March."

"At what period of the year are you mostly under advance to the farmers?—From the end of March to the end of September."

"Is, then, the period at which you are mostly under advance to the farmers, the period of your lowest circulation?—Certainly it is."

Mr. Stuckey gave evidence to the same effect. Surely, it must be perfectly clear, after this testimony, that the power of accommodating the farmer does not depend upon increased issues. The next assertion is, that it would be impossible for them to advance to the farmer the means of paying his rent, as is now their constant practice. Now, it appeared upon this point, that a few days before the rent days of the neighbouring landlords, country banks are in the habit of advancing notes to the farmers, who are their customers, for the purpose of paying their rents; and that a few days after the rent days, the notes are either paid into them again by the landlords, or returned to them in the exchange with other banks into which they have been paid. Can anybody believe, that for this purpose such a power is necessary? Can anybody believe, that there are not many ways of affording such accommodation. The advances are certain, are foreseen, and for a short time only. The banks might safely reduce their reserves for such a purpose as this, and I am sure any practical man would suggest several modes of doing it with the greatest ease and security. But in this, and in all other similar cases where an increase of accommodation is required, the Banks may obtain the power of affording it by the means of Bank of England notes. I am aware that there is a very general impression that the necessity of doing so would materially curtail their means of assisting their customers. But nothing is more remarkable than the very strong evidence which is given on this point in the case of country bankers who now act with Bank of England notes, and which entirely contradicts any such notion. The practice of such bankers is, that they are entitled to have a certain amount of Bank of England notes, on depositing approved bills of exchange, with the power of demanding some addition on the same terms; and beyond that, they must obtain what notes they require, as any other person must. What is the evidence as to the power of accommodation which is given them by so using Bank of England notes? Let it be observed, that I am quoting only from the evidence of those who are adverse to the proposition which I am advocating. Mr. Gilbart was asked,

"Do you apprehend that any inconvenience has arisen to their customers or to the public from the substitution of Bank of England notes for the notes of country banks?—I think the only inconvenience has been, that the bankers have been more liberal to their customers than they otherwise could have had the means of being."

"It has not at all reduced the extent of accommodation afforded? I think rather the reverse."

This is the opinion of a gentleman well versed in the management of banking business in all its branches, although he had no practical experience on this particular point. I will now quote the evidence of a gentleman who had given up his own circulation, and substituted for it the notes of the Bank of England, on the system which I have mentioned. Mr. Wright, of Nottingham, was asked,

"Do you conceive that it has in any way limited the accommodation which you have the power of affording to your customers?— Not at all."

He then states generally—

"Demands for accommodation increase at particular times, both agricultural and commercial customers. We are quite as well able to supply these increased demands, as when we used our own circulation."

And he is then asked—

"And you do not find yourselves embarrassed by not having the power of making increased issue in your own notes?—Not at all.

The effect of the measure from which restriction is anticipated is in reality, increased power of accommodation; and the only evil is stated to be, that bankers are enabled to be more, not less, liberal from adopting the use of the notes of the Bank of England. I think, therefore, that agriculturists need not be alarmed at the prospect of any injury being done to them by the limitation on country issues. If this evidence is to be believed, the change would operate to their advantage. With regard to Scotch banks, I understand the proposal of the right hon. Gentleman to be, that no new banks of issue shall be established, and that there shall be a weekly publication of the circulation of existing banks, as in England.—[Sir R. Peel—I did not say so.] I understood that the publication was intended to be of all issuers in the United Kingdom, and so I read the printed resolutions. It certainly ought to be so. I wish, however, to call the attention of the right hon. Gentleman, to the manner in which the amount of the circulation of the Scotch banks is made up, because it is different from the mode adopted in England; and there ought to be an uniformity in the method of making up the accounts. The published account of the circulation of the country banks in England includes, I believe, nearly the whole amount of notes which they have stamped. The account of the Scotch banks does not include anything like the amount of notes stamped. The English bankers make no deduction for the notes of other banks they happen to have in their hands. Most of the Scotch banks make the return of their circulation immediately after their exchange of notes with other banks, or deduct from the amount of their own notes which are out, the amount of the notes of other banks which they have in their possession on the day of making the return, and give the difference as the amount of their circulation. In illustration of this, I will refer to the evidence of two of the witnesses from Scotland. Mr. Blair, the Treasurer of the Bank of Scotland, says: —

"The return does not include the stock of notes in the hands of the bankers. If the circulation of Scotland is considered as being 3,000,000l. on the average, there probably are 4,000,000l, besides, making 7,000,000l. altogether,"

I am confident that there is nothing at all approaching to this state of things in England. Mr. Anderson, the manager of the Glasgow Union Banking Company, said, in reference to the difference in the amount of notes in circulation before and after the day of exchange with other banks,

"I should think it would be more than 30 per cent."

It is evident from this, that if the Scotch banks made their returns on the day before the exchanges, deducting the amount of the notes of other banks which they might happen to have in their hands, and if the English banks made their return on the same day, doing nothing of the kind, the amount of circulation in Scotland would appear to be 30 per cent. less, than if the returns were made on the same principle as in England. The difference would be less, if the returns were made on any other day, but there will always be a difference, unless the English bankers were invariably to make their returns immediately after the exchange of notes, because this is the only period when this difference of principle cannot operate. This leads to a false impression as to the comparative amount of circulation in the two countries, and clearly the returns ought to be made on the same principle on both sides of the Tweed. I will not trouble the Committee with any observations as to banking in Ireland. The same measure is to be applied to the country banks there as in Scotland. I presume that the charter of the Bank of Ireland is to be renewed, and I trust that this opportunity will be taken to bring it into closer connection with the Bank of England, so that their action may be more in unison with each other. I believe, Sir, that I have now adverted to the principal features of the measure of the right hon. Gentleman, with such observations as it seems to me necessary to make upon them; but before I sit down, I must notice one or two of the general objections which I have heard made to the proposal of this, or indeed of any similar system of currency. It is said to be impracticable; that as regards the Bank of England, for instance, it cannot be carried into effect; and the state of the accounts of the Bank at various times is appealed to in proof of this assertion. There is a table in a letter of Mr. Pennington's in 1840, pointing out different periods in the course of a few years, in which the principle of this measure could not have been applied to the existing state of the Bank at those times. I admit this at once, but instead of being an argument against, it seems to me to be the most convincing proof in favour of, the principle which I am endeavouring to support. The advocates of that principle say, that under the present system of management, the Bank of England has often been placed in a position in which the affairs of the Bank ought not to have been, and therefore, they wish to apply a new system of management. The argument against the application of the new system is, that it would be incompatible with a state of things produced by the old one. But this, in fact, admits all that we ask, and the simple answer to this and all similar arguments is, that if the sound principle had been acted upon steadily from the first, the Bank never could have been found in that position. The very object of applying sound principle is to prevent the possibility of such a state of things ever being produced. The objection, however, which is most felt is, I have no doubt, that persons anticipate that the undeviating application of this principle will, at times, produce what is called a pressure on the money-market, and will deprive the commerce of the country of some facilities in the way of credit which it has hitherto enjoyed from the Bank of England. I am not prepared to deny that this may be the case; and it would be absurd to shut our eyes to the possible consequences of the measure which we are about to pass. But no good can be gained without paying its price for it. This facility was obtained by a degree of insecurity in our monetary concerns which it is most advisable to avoid; and if we obtain the security, we must purchase that advantage at the price of some portion of this ease and accommodation. I say this on the assumption that there is a great advantage in this so called facility of accommodation from the Bank of England; but there are two very important questions to be considered before I can admit that the change will, even in this respect, be prejudicial to the commercial world. First, are the advantages derived from the accommodation afforded by the Bank of England in times of difficulty, so great as is supposed? Secondly, is not the pressure under the present system greater than it would be under that which is proposed? I suspect that the extent of accommodation afforded by the Bank to merchants or traders in periods of distress, has been very much overrated. I am confirmed in this opinion by that of the late Mr. Ricardo, who said,—

"A great deal of stress has always been laid upon the benefits which commerce derived from the accommodation afforded to merchants by the Bank. I believe it to be quite insignificant, compared with that which is afforded by private individuals."

There was a remarkable proof of this in the year 1839. I need not remind Gentlemen of the difficulties of that year; or those who are at all acquainted with the subject, of the dangerous position in which the United States' Bank stood at that time. Under these circumstances, in the autumn of 1839, the agency of the United States' Bank in England, applied to the Bank of England for assistance. After much consideration, the Bank offered an advance to the extent of 300,000l. to be re-paid in a month. This was not deemed sufficient, and was declined. The agent then applied to individuals, and from their private resources, assistance to the amount of 800,000l., for an almost unlimited period, was obtained. No doubt it was obtained on the payment of higher interest than would have been paid to the Bank at their fixed rate; and it is, in truth, owing to this circumstance, that at such times the rate of interest charged by the Bank is lower than the market rate, that applications for assistance are made to it to so heavy an amount. But what reason is there, when persons apply for assistance in times of insecurity, that they should not pay a price for that assistance, in proportion to the risk which the person runs who affords it to them? Higher interest must necessarily be paid at such times, and I believe that one of the greatest blessings ever conferred upon the commerce of this country, was the repeal, or I should rather say, (for such is the fact) the suspension of the Usury Laws. The ease with which the pressure of that year was borne, and the few failures which took place, has been mainly attributed to the facility which has been given by the relaxation of these laws, to the flow of capital into those channels where it was most needed. It is, moreover, a great mistake to suppose, that the power of rendering such assistance by the Bank, depends so materially on its power of issue. The accommodation afforded in that year, 1839, was mainly through the discount of bills. Compare then, the amount of their circulation, and of the "bills discounted" at different periods. They stood thus:—

It appears from this statement, that whilst the circulation decreased about 1,800,000l., the "bills discounted" increased about 5,000,000l., and it can hardly be said that the accommodation to the public depended on their increased issues. The Bank is possessed of immense capital. That capital gives them the means of affording the requisite assistance from legitimate resources; and they may thus confer the greatest benefit on the community, but there is no safety when they go beyond this, and give accommodation only from increased issues. In the second place, I have a very strong opinion that, under the proposed system, the pressure will be, in reality, less than under that which is held up as causing so little. The effect of the change will be to enforce a contraction of the paper at a much earlier period of a drain than heretofore. Hitherto the drain of bullion has almost always been allowed to proceed a great way before any reduction of the paper took place. Now, upon this point I wish to read to the Committee part of an answer of Mr. Jones Loyd. The whole of the answer is well worth reading, as is the whole of that gentleman's evidence, but it is too long for me to quote at present. His words are these, and they express what I wish to convey much more clearly and forcibly than I could hope to do myself;—

"It appears to me that contraction applied in the early stages (of a drain) would be applied when it could be borne without inconvenience to the community, and that it would necessarily tend to counteract and check in their early growth those tendencies, viz. to speculation, over-trading, and excessive rise of prices, which by their undue expansion under our present system, and the consequent violence of the subsequent collapse, produce the extreme intensity which characterizes the commercial crisis in this country."

He then proceeds to shew, by reasoning which appears to me to be quite conclusive, how the early application of this principle in the year 1834, would in all probability have mitigated in a great degree, even if it had not prevented the evils of 1836–7. Nor are these conclusions without the foundation of facts, from which they might safely be drawn. In a former answer he had compared the results of various drains; and shewn the advantage in one instance of a course such as he recommended. Part of that answer was as follows:—

"My object in alluding to the drains of the four periods in question, namely, the drain terminating in the crisis of 1825, the drain which continued from the year 1830 to the year 1832; the third drain, which began at the end of the year 1833, and terminated in the year 1836, and the last drain which began in 1838 and ended in the autumn of 1839, has been for this purpose, to shew that of those four drains three of them were not met by any contraction of the paper circulation of the country; and those three drains, all terminated in a severe crisis, in a very exhausted state of the bullion, in great commercial difficulties, and in a state of general alarm respecting the safety of our monetary system; but that the fourth drain, namely, that from 1830 to 1832, was met by a contraction on the part of the Bank of England, bearing about the same proportion to the bullion lost, which the issues of the Bank of England bear to the aggregate paper issues of the country; the country issues at that particular period being under a legislative action, which, no doubt, necessitated a reduction on their part, the result was, that the drain passed off, in the words of Mr. Horsley Palmer, 'without distrust or discredit of any kind."

I really do not see how proof in a matter of this kind can be pushed further. Reasoning and experience are combined to demonstrate the advantage of the course thus recommended. But this reasoning applies even still more strongly to the measure of the Government. The advantages already pointed out are those attending on early contraction of the paper circulation, when the drain has already begun. The proposed regulation will impose a check at a still earlier period, will in some degree limit the increase of the paper. This will be done at a time when everything is buoyant, when a little caution may well be enforced, and can injure nobody. The amount of the paper circulation never will attain such a height as materally contributes to create a drain, and if the drain is not altogether prevented, it will be very much diminished in extent. Surely this is a state of things in which the pressure and inconvenience will be less than is at present frequently experienced. I am confident that the real effect of the measure will be to prevent the existence of these very evils which some persons anticipate as its consequences. I will now only trouble the Committee with one further quotation from the evidence, and that is from the evidence of Mr. Kennedy, the manager of a bank in Scotland, for the purpose of showing what in his opinion is the effect of a drain of gold upon the circulation of a country bank. He gave very able evidence, and he is the only country banker, of those whom we examined, whose evidence refers to any immediate connexion between them. He was examined by the right hon. Gentleman opposite, and these were the questions and answers which I quote in the very words as they are reported:—

"You say you attend to the state of the foreign exchanges, and that when you observe that there is a drain of bullion on the Bank of England, you consider it expedient to restrict your issues?—Yes."

"You do not do that upon any theoretical views of the principles of currency, but because practically you find it necessary to do so?—Certainly, I find it necessary for my own protection.

"And you have actual experience of what would be the consequences if you did not do so?—I have.

"And you find that no derangement of the commercial transactions of the country takes place by acting on that principle?—Hitherto I have found none.

"You think it operates ultimately as an useful security to the public who deal with you, as well as to the Bank?—I think so."

He afterwards explains, that this does not refer to any fluctuation in the amount of his notes from local and temporary causes, and, after explaining how the operation is effected, he is asked— "These measures of precaution do not entail any loss upon the Bank?" and his answer is, "They do not; the rate of interest being raised, protects us." Raising the rate of interest is precisely the measure which the Directors of the Bank very properly adopted during the drain of 1839. I anticipate, from the adoption of this measure, a less fluctuation in the amount of the circulation—a less fluctuation in the range of prices; but I am not so unreasonably sanguine as to suppose that it will put an end to all speculation and to all miscalculation in commercial matters. Prices will necessarily vary, according to the relative supply and demand for commodities at various times. Speculators will make mistakes in their calculations as to the amount of the supply, and the urgency of the demand. Prices may be unnaturally forced up, and individuals may be ruined in the collapse. All this cannot be put an end to, so long as competition exists in trade, and hope of gain influences human minds; but it is no reason why we should not remedy what is in our power, because we cannot attain everything. We can prevent an additional stimulus being given to a rise of prices and undue speculations, by the influence of an ill-regulated currency; and this it is the duty of the Legislature to attempt. Other persons are of opinion, and amongst them was a late friend of mine, Mr. Leatham, a banker at Wake-field, that little or nothing will be done, unless some check is put upon the circulation of bills of exchange; and that all the mischievous speculations are fostered and carried on, not by enlarged circulation of notes, but by the means of an increased quantity of bills of exchange. This may be so to a certain extent, but it is a much more difficult matter to interfere in the private credit of individuals, and the trust which they choose to repose in each other's honesty or solvency. Against the danger arising from this source, individual prudence and indivi- dual caution must mainly be the safeguard. But the limitation of the paper circulation cannot but tend to impose some check on the circulation of their bills of exchange. They may pass from hand to hand for a time, but, sooner or later, they generally come to be discounted or discharged in notes; and if there is at the time any cause in operation which limits the issue of the notes, it is impossible but that this circumstance should in some degree enforce caution in creating the bills of exchange. These objects, however, great and important as they are, are but secondary to what is the principal object of our proposed legislation. That object I understand to be the inviolable maintenance of the standard of value in this country. By that I mean the preservation of the constant identity of value of the pound in paper and of the sovereign, with that of the quantity of standard gold, which by law constitutes the pound sterling. That this identity may be affected by an excessive issue of paper is not denied. The experience of this country, and still more, that of the United States of America, abundantly proves, that the convertibility, at the will of the holder, is no security against excessive issues, or ultimate suspension of cash payments, ft is not enough, then, to enact that the Bank notes shall be convertible. The paper circulation must not only be convertible, but must vary in amount from time to time, as a metallic circulation would vary. A system, therefore, of paper circulation is required, which will attain this object, and ensure a constant and steady regulation of the issues on this principle. This, and this alone, affords a permanent security for the practical convertibility of the notes at all times, and for the consequent maintenance of the standard. It is because the measure of the right hon. Gentleman is based on this principle; and as far as it goes, carries this principle into execution, that I feel it to be my duty to give it my cordial support.

expressed his high approbation of the measure before the House. The plan of the right hon. Baronet rested upon principles that had been demonstrated to be sound, and which he therefore could have wished carried somewhat further into practical operation. He acknowledged, however, that all proposed to be done was well and skilfully done—that every step proposed to be taken was taken in the right direction, and that the ground had been skilfully prepared for the full development of the great principle which was contained in the present measure, and he was willing to admit that in the present state of public opinion, there might be a justification for the right hon. Gentleman in not carrying the principle into further operation at this moment. He might perhaps himself have thought that they might extend to Ireland and to Scotland the same regulation as to small notes which already existed in England; but he admitted, that the right hon. Gentleman was infinitely more competent to form a judgment upon this point than himself. Seeing that the plan proceeded upon a principle decidedly sound, and that it was carried so far into operation, it was but just to infer that it was carried at present as far as it safely could be. There were many obstacles that the philosopher might overlook in his closet, which no man engaged in conducting the practical business of the world—least of all a Minister—could venture to disregard or neglect. He agreed with his hon. Friend, that the right hon. Gentleman had manifested great skill in the manner in which he proposed to bring his principle into operation. He approved of the separation of the functions of the Bank of England. His hon. Friend who had just sat down, had alluded to the great measure of 1819, and he had also stated that in which he (Sir W. Clay) fully agreed with him, that it must be a source of gratifying reflection to the right hon. Gentleman, the part he had taken with regard to that measure; it did him honour, as a British statesman, that his name should be connected with that great and salutary reform. It was true that the difficulty of a restoration of cash payments had been at the time much over-rated, but it could not be denied that considering the long period during which erroneous principles had prevailed, and the temptation to take the easier, the less wise and honest path— the measure was bold as well as just, and conferred equal credit upon the Statesman who proposed it, and the Parliament that had sanctioned it. The measure of 1819, established as the basis of the invariable convertibility of paper money, our currency. The measure now proposed to the House was second only in importance to that measure. The adoption of the measure now before them, would be a recognition by Parliament of the truth of the principle, that a paper currency could not be guarded against excess, if its issue was confided to those who profited by the operation. These legal convertibilities were not sufficient—of the soundness of this proposition, the experience of the last twenty-five years afforded the most convincing proof. America had been refered to; in that country there was free trade in banking, with a convertibility of paper into coin at the will of the holder. There was, in addition a law, almost in every state, that two per cent. per month, that was 24 per cent. per annum, was to be added to the value of the money claimed on the note of a banker until it was paid. But these precautions were inadequate to prevent the excess of paper money. Mr. Levi Woodbury, Secretary of the Treasury in the United States, in his Report to Congress of 6th December, 1836 (four months, that is, before the suspension of cash payments throughout the Union), after stating that the note circulation was in January, 1834, $$76,000,000; January, 1835, $82,000,000; January, 1836, $108,000,000; and December, 1836, $120,000,000; says,

"This increase of forty millions, or about one-third of the paper circulation in a year and a half, is a great and sudden fluctuation which never could occur in a currency purely metallic.

"This excess has been sufficient to constitute the chief cause for the artificial augmentation in prices and unnatural stimulus to speculation, which cannot, under any sound views of political economy, be too greatly deprecated, or their recurrence too carefully guarded against. These sudden and great vibrations in the value of property and labour, however produced, or however flattering to many at first, are in the end dangerous to all classes, as well as ruinous to commerce, and to every species of regular industry."

In May, 1837, the suspension of cash payments occurred in every state in the Union; Congress was called together in September, and in the President's Message in opening Congress, he says,

"The history of trade in the United States for the last three or four years, affords the most convincing evidence that our present condition is chiefly to be attributed to over action in all departments of business—an over action deriving, perhaps, its first impulse from antecedent causes—but stimulated to its destructive consequences by excessive issues of bank paper, and by other facilities for the acquisition and enlargement of credit."

After stating in figures the progressive increase in the issue of notes, and referring to the simultaneous expansion of paper currency and credit in England, he goes on to say,

"In view of these facts, it would seem impossible for sincere inquirers after truth to resist the conviction, that the causes of the revulsion in both countries have been substantially the same. Two countries, the most commercial in the world, enjoying but recently the highest degree of commercial prosperity, and maintaining with each other the closest relations, are suddenly, in a time of profound peace, and without any great national disaster, arrested in their career, and plunged into a state of embarrassment and distress. In both countries we have witnessed the same redundancy of paper money, and other facilities of credit—the same spirit of speculation — the same partial success—the same difficulties and reverses, and, at length, nearly the same overwhelming catastrophe."

It was not his intention at present to go at large into the general question, he would only notice for a moment one or two of the points referred to in the statement of the right hon. Baronet. If he understood correctly what had fallen from the right hon. Baronet, it was his intention in the event of the substitution of the Bank of England for the country note circulation, to permit only some given portion of the notes so substituted to be issued on securities, requiring for the remaining portion a deposit in gold. He (Sir William Clay) could not see the necessity for this provision; there was no reason to suppose that the quantity of specie now in the country was not a sufficient metallic basis for the note circulation, and it seemed to him, that by the provision in question, the right hon. Gentleman was creating gratuitous difficulties in the working of his measure. By the plan of the right hon. Gentleman it was made imperative on the Bank to take in bullion at 3l. 17s. 9d. per oz., but they could not be called on to issue it in exchange for notes at a less rate than 3l. 17s. 10½d. per oz.—it might be worthy of consideration, whether it would not be well to require of the Bank to issue bullion at somewhat less than that rate. Coined gold of course they must issue at that rate; but if some slight temptation in price were held out to parties wanting gold for exportation to take bullion rather than sovereigns, a considerable annual expence in coining might be saved to the country. With reference to that portion of the resolutions which related to an amended constitution of joint-stock banks, he would merely then observe, that when the appropriate period in the discussing the Bills to be founded on the resolution should arrive, he should propose that banks should be established of limited liability on condition of paying up three-fourths of their nominal capital, and a full publication of accounts. Reserving to some future stage of the measure any remarks he might have to make, either on the points to which he had alluded, or others which seemed to him to require notice—he would only then repeat, that the plan of the right hon. Gentleman as a whole, had his cordial concurrence and approbation.

said, that the measure now before the House had his entire concurrence, and his full approbation. It had justly been stated, that the great object with which this measure had been submitted to Parliament was, to introduce additional security into the circulation, and an invariable principle of regulation giving assurance during the period of its continuance of a perfect conformity to the value of a metallic currency. It appeared to him that his right hon. Friend had adopted the most effectual means of accomplishing those objects, and it was therefore most expedient and important that the House should recognise and sanction his plan. The great feature of the plan was, that the Bank of England should be divided into two departments. In attempting the accomplishment of that object, his right hon. Friend proposed to give the Bank of England no control over the currency; and this arrangement was necessary, if it were to be made a central source of issue. The circumstances of the Bank, the circumstances of the country, and the necessity for placing the currency upon a sound basis, required that the private character of the Bank as an issuer of paper, should be taken away. It became necessary that the Bank should be no longer called upon to choose between its private interests and its public duty. It was impossible that the Bank of England could be invested with the character of a great public department, unless it were divested of the character of a private trading concern; and he thought that the proposed course of separating it into two departments was the wisest that could be adopted. His hon. Friend, the Member for Halifax, had justly observed, in examining the statements respecting the amount of the circulation, that that circulation would at first appear largely increased. The whole amount of treasure, except what might be required in the deposit department, would, of course, find its way into the issuing department. This, no doubt, would at first create a large apparent increase of circulation; but it would prove no valid objection to the plan, nor indicate any real change in the amount of issues. There was one point, however, on which he thought the plan of his right hon. Friend might have gone somewhat farther, and that was, in dealing with the subject of branches. There was nothing worse than the inordinate number of branch banks which existed throughout the country; and not only were there a great number of branch banks, but likewise a vast number of agencies, which gave to individuals the power of dealing with the resources of the Bank, and that too at an indefinite distance from the seat of management, and without any control whatever. Upon these practices it was highly desirable that some check should be imposed. He wished that the measure which his right hon. Friend had introduced, had done somewhat more towards effecting that object, or at all events had imposed some such salutary restraint as would, sooner or later, put an end to the evils of branch banks and agency. There were other points for discussion on which he might have addressed the House, but he did not wish unnecessarily to occupy their time; he could not, however, help observing, that he thought some greater inducement might be offered to the existing banks of issue to accept the paper of the Bank of England; the inducements now offered appeared to him too slight, and he did think that such means might be adopted as would make their acquiescence very probable. He could not address these observations to the House, without at the same time saying, how heartily he rejoiced at the circumstance that his right hon. Friend had taken the present opportunity of proposing a plan to Parliament. He should be sorry to see such an occasion allowed to pass without some attempt to place the currency of the country upon sound principles, which would give to public credit a character of stability and security, alike advantageous to the country and honourable to the Minister by whom it was proposed. He rejoiced also, that his right hon. Friend had the wisdom to abstain from altering the habitual arrangements of the country. He was perfectly right in allowing private issuers to continue their issues for a certain length of time, and under the limitations which he had proposed. To treat those parties with forbearance was not only an act of good policy, but one of justice likewise; and thus did his light hon. Friend avoid giving any shock to public credit. Any Minister must be considered as having deserved well of the country, who introduced a measure calculated to mitigate the violence of those periodical shocks to which the monetary system of the country had long been unfortunately exposed; and if, as he believed, the important change now under the consideration of Parliament should be attended with such a result, the author of it would be entitled to the universal thanks of the country.

said, that he concurred generally in the great and well-intentioned plan of the right hon. Baronet upon this important subject. There were one or two points, however, upon which he had objections to make, and which he hoped he should be able to carry on some future occasion. He was not going to taunt the hon. Baronet, the Member for the Tower Hamlets, for finding fault with the Government for not extending this measure to Scotland and Ireland, and abolishing their issue of one-pound notes. He, however, thought that the right hon. Baronet had shown very great prudence in not raising the hornets' nest about his head, which he would unquestionably have done if he had attempted any interference of this kind with Scotland and Ireland. Still, however, there were one or two points in the plan of the right hon. Baronet which, particularly in the agricultural districts, would be looked upon with a searching and jealous eye. One great point had been unmasked in the course of the present debate, namely, that it was the intention of the Government, sooner or later, to establish one general bank of issue throughout the whole country. This was a bold experiment, but it was nothing but an experiment. It was an entirely new doctrine in political economy, one not propounded by any of those great practical names, who had been summoned before the Committee of this House to give their evidence upon this subject. It was a doctrine of the modern school of political economy—it was one which might be found extremely fallacious, and at any rate it behoved them to look very narrowly at it before they adopted it. It was a startling thing to find that this proposition was one which came from the band of what were called "the Philosophers." Every practical man, who appeared before the Committee, gave strong reasons why a single bank of issue was a most inexpedient thing to adopt. Upon referring to the Report of the meeting of bankers not having banks of issue, and who, therefore, had no direct personal interest in the question, he found by one of their resolutions that they declared themselves strongly against such a proposition: they declared that they considered that the present mode of country banks of issue, with local control upon their proceedings, was the best adapted to the commercial transactions of the country, and that the same advantages could not be obtained by the adoption of a single bank of issue. The right hon. Baronet at the head of the Government, speaking of the Bank of England, intimated that that establishment would be ready to supply its notes for the use of country establishments, allowing a certain profit. This sufficiently unmasked the intention which the Government had in view upon this important point. Let them, before they tried this experiment, recollect the year 1825, which opened in as sunny a state as anything which the present time presented, and which ended in storms which were lamented by all. He did not mean to say that there was any danger impending at the present moment; but, whatever plan they adopted upon this subject, they should endeavour to prepare for the different state of things which might sooner or later occur. He did not intend to go into details at the present moment; but he did not quite understand the objections of the right hon. Gentleman on the subject of the currency. The right hon. Gentleman contended that the circulation should rest upon securities and upon bullion—a gross average of thirty millions. But if the bullion should go as it went in 1825, until there was only about one million left, what became of the securities? It might all look very well in theory to separate the two departments of the Bank, and insist upon the weekly publication of their affairs; but he thought it must have the effect of bringing their bullion down lower than it was at present, and for this he thought they ought to be prepared. With regard to country banks of issue, he thought that the Government were quite justified in taking any steps they might think necessary for their regulation; but he did not think they would do right to break up the machinery by which they were worked, in case it should be found necessary to retrace the step they had taken, and recur to them. He thought that the right hon. Gentleman proposed to restrict the circu- lation of the country banks of issue too much. He proposed to restrict it to the average of the two last years, which, from prudential reasons on the part of the banks themselves, were the lowest which had been known for a long time. What had been proposed to the right hon. Baronet was, that the average of the last five years should be taken as the limit; and though the difference of 1,500,000l. did not seem very great in itself, yet that between 8,000,000l., the average of the last five years, and 9,500,000l., the average of the last two years, was very well worth considering. At any rate, he thought that the right hon. Baronet ought in fairness not to have fixed the maximum of circulation by the average, but by the maximum circulation of the two preceding years. When the right hon. Gentleman said, that people ought to be induced to draw upon their capital, and not upon their credit, he said that it was not in the power of any Legislature to compel the adoption of such a principle; and that if men in business were shut out from the use of the notes in the country banks, they would resort to a circulating medium of their own, namely, bills of exchange. He could not admit that the country bankers acted upon any such principles as to regulate their issues by the state of foreign exchanges. He believed, on the contrary, that they always regulated them by the legitimate demands of trade. ["Hear."] He understood that cheer; but from what he had heard from practical men who were competent to form an opinion on the subject, he was convinced that what he said was the case. The right hon. Baronet would allow the union of two private banks, but not the union of a private bank with a joint-stock bank, or of two joint-stock banks. This appeared to be a restriction directly at variance with the whole scope of the right hon. Baronet's argument on this subject. Let not hon. Gentlemen run away with the notion that there was anything of quackery in the constitution or proceedings of joint-stock banks. He would refer to no less an authority than the late Mr. Huskisson for a very high testimonial in their favour. He hoped that where two or more banks were joined together, such united banks should enjoy an united circulation. If not, they would have to provide for a fall in prices. The failures to which the right hon. Baronet had alluded as having taken place from 1839 to 1844, were not, as he understood, joint-stock banks, but, in every instance, private banks; and he was not aware of a single instance of a joint-stock bank failing in which the public as depositors were losers. Then, with regard to the circle of sixty-five miles round London—that circle contained an area of 13,000 square miles— the whole area of England being but 50,000 square miles. Now, how would that limit operate? [Sir R. Peel here observed that every accommodation is afforded to agriculture within the circle of sixty-five miles.] But what he complained of was, that they excluded the joint-stock banks from issuing. The population within the area of the sixty-five miles was 5,000,000; and the counties included were Bedfordshire, Berkshire, Buckinghamshire, part of Cambridgeshire, Essex, a great portion of Hants., Hertfordshire, nearly all Kent, part of Huntingdonshire, Middlesex, North-amptonshire, part of Oxford, Surrey, and Sussex. In those districts, there were 100 private banks, and there were also thirty-seven branches of banks, which the right hon. Baronet altogether overlooked—viz., of the London and County banks and joint-stock banks; and the issue of notes by these banks, according to the estimate of the right hon. Gentleman, was 1,300,000l. But the disasters throughout these districts had been as severe as any to which the right hon. Baronet had referred. He did not speak so much as to the northern circle, but in the southern part, as Brighton and the neighbourhood, the result of forcing that important district to live under a system of private banks—chiefly and partly under the Bank of England was forcibly illustrated—for with the issue of 1,300,000l., there had been failures and disasters, together with an amount of private loss, which would not have occurred under a system of joint-stock banks. He, therefore, should propose some curtailment of the circle of sixty-five miles. While on this point, he could not forbear remarking on the great advantage which had resulted from the amendment of the law of partnership in relation to joint-stock banks; nothing could be more direct and fair than the manner in which the claims of those establishments had been received and considered; and great benefit had followed the recognition by law of their rights. He, therefore, felt called upon to tender his acknowledgments to the right hon. Baronet, not only for the good he had done in this respect, but also for the mode of doing it; and he believed he was now speaking the opinions of every man concerned in joint stock banks. In mentioning these points, his object was to render the plan of the right hon. Baronet more complete, and less annoying to the country in carrying it into effect. The plan proposed by the right hon. Baronet, he was ready to admit, was bold and patriotic; but, like all human propositions, it had its faults, which, if not corrected, would impede it materially in its operation, therefore, he had taken this, the first opportunity, to point out to the right hon. Baronet what he conceived to be those faults, in order that they might be considered and remedied before it was too late. He had been induced by a sense of duty to take this course, but he assured the right hon. Baronet that nothing should be wanting on his part to aid the carrying out of the plan to that complete success, which the right hon. Gentleman and the House were alike anxious it should attain, and the necessities of the State required.

said, he would not enter at any length into the subject of the present debate at that hour of the night, and after the general approval that had been expressed of the principle of the measure. The hon. Gentleman who had just sat down said, that this measure was founded rather on the opinions of philosophers than of practical men; but if we looked to the practical results of the system of paper credit, we must be convinced of its pernicious nature. Let any one consider the stoppage of the banks in 1793, in 1814, 1815, 1816, and in 1825, 1826. In the latter year, in six weeks, more than ninety banks stopped. The result of their embarrassment was an alarming run on the Bank of England; and in one of the dockyards, owing to the failure of the local banks, it was found impossible to pay the wages of the workmen. And on whom did these evils from the failure of local banks principally fall? On those least able to support them—on the small farmers, the small tradesmen, and poor of the neighbourhood. The bullion committee in their report expressly stated, after alluding to the general mischievous effect of paper credit, " By far the most important portion of this effect appears to your committee to be that which is communicated to the wages of common country labour, the rate of which, as is well known, adapts itself more slowly to the changes which happen in the value of money than the price of any other species of labour or commodity." He (Mr. Gore) approved of the measure of Her Majesty's Government, because it was based on the sound principle that money was a commodity, and, like other commodities, subject to the laws of supply and demand. The effect of the measure would be to prevent a superfluous and excessive currency which was only prejudicial to the real interests of the country, at the same time that it secured a full supply for every practical purpose. Mr. Locke took this view of the nature of money, when he said " Money hag a value, as it is capable by exchange to procure us the necessaries or conveniences of life, and in this it has the nature of a commodity;" and in another place he spoke of "money, in buying or selling, being perfectly in the same condition with other commodities, and subject to all the same laws of value." Mr. Hume said to the same effect, that "to endeavour artificially to increase paper credit can never be the interest of any trading nation, but must lay them under disadvantages, by increasing money beyond its natural proportion to labour and commodities, and thereby heightening their price to the merchant and manufacturer." Adam Smith and all the other great writers on political economy—those shining lights who had imparted to the world the benefits of their genius and reflection—had maintained the same opinions. They were told this measure would tend to lower prices. Whatever tended to lessen the cost of production must lower prices. Every new invention, every improvement in manufactures, in agriculture, in art, in science, tended to lower prices; and if it were desirable to permit the fall of prices, it must also be desirable to raise the cost of production, and to check the progress of improvement. Then as regarded the supply of bullion; there was no reason to fear an insufficient supply. Mr. M'Culloch estimated the total available produce of the American, European, Russian, and Asiatic mines, at 9,050,000l.; South American and Mexican, 5,600,000l.; United States, 100,000l.; European, 750,000l.; Russia —Asiatic, 2,600,000l. In former times a great proportion of the gold and silver raised from the American mines went to Asia. Humboldt calculated that at the beginning of this century, of 43,500,000 dollars raised from the American mines, 25,500,000 dollars went to Asia. But this was no longer the case. From 1828 to 1838 the imports of bullion to Asia rapidly declined; and from 1831 to 1833 the exports of bullion from Asia actually exceeded the imports to it. At present there was again a temporary excess of imports of bullion in Asia over exports; but the prospect there was, that an increasing amount of exports of our cotton goods, yarn, and other manufactures to Asia, must effectually prevent any great drainage for the future of the precious metals. Under all difficulties and whatever might have been the dangers which encompassed the country in bygone days, the great statesman who presided over the country had refused to listen to anything that would impair the true principles of national greatness. The opinions of those who advocated excessive paper currency were, in fact, on this subject, the opinions that were promulgated in France at the commencement of the French Revolution; and in allusion to which Mr. Burke said,—

"They imagine that our flourishing state in England is owing to Bank paper, and not the Bank paper owing to the flourishing condition of our commerce, to the solidity of our credit, and to the total exclusion of all idea of power from any part of the transaction. They forget that in England not one shilling of paper money of any description is received, but of choice, that the whole had its origin in cash actually deposited, and that it is convertible at pleasure in an instant, and without the smallest loss, into cash again. Our paper is of value in commerce, because in law it is of none. It is powerful on Change, because in Westminster-hall it is impotent."

In previous periods of our history attempts had been made to lower the standard of money. The proposal was made in 1626, but manfully resisted. Again, in 1695, a time of great difficulty, with many dangers to encounter, and engaged as the country was in an arduous foreign war— a time of which Mr. Hallam says, that

"Never was the vessel of the State so near being shipwrecked."

Great inconvenience was felt from the clipping of the coin. But the Ministers of that day took the wise and manly course of not lowering the standard of value, although the new coinage which they decided on to prevent the depreciation, cost the Government no less than 2,500,000l. But the great men who then presided over the destinies of England refused to listen to all the pet nostrums of crude projectors. They were too firm to yield to the pressure of temporary circumstances; but held fast by those just and true principles on which alone the safety of nations could be based. By BO doing they reflected credit on themselves, preserved the country from the evils that threatened it, and left to their posterity the bright example of their fortitude. He (Mr. Gore) thought that Her Majesty's Government in bringing forward the present measure, had acted on those principles which were most conducive to the welfare, the prosperity, and greatness of England, and, thinking thus, he should give the measure his most cordial support.

observed that, notwithstanding the objections which had been urged by his hon. Friend the Member for Renfrewshire (Mr. P. M. Stewart), the unanimity upon the question was somewhat awful to those who, like himself, did not altogether agree with the proposition. He felt it necessary to say, in the first place, that he adhered to the interpretation of the pound as laid down by the right hon. Baronet, but what he contended for was the principle of free-trade as regarded those two subjects, money and issues, which, as applied to all other subjects, he was told, was the principle of common sense. And in this respect, he could not allow his hon. Friend the Member for Halifax to claim the credit of a philosopher on account of any new theories he had laid down; to him, his hon. Friend appeared simply in the light of an anti-free-trader. He had been told that the amount of currency in circulation operated upon the price of commodities; that, however, was a theory which had never yet been completely established in his mind, and that doctrine was based upon another, which he found laid down in Mr. Jones Loyd's evidence, viz., that the only way in which a paper currency could be maintained of the same value as gold was, that the gold conformed in amount to the actual quantity represented by the paper. It was evident, however, that the parties who advanced these various doctrines, were by no means agreed as to what currency meant. Some considered bills of exchange and bankers' checks as currency, but that which appeared to him as the most correct definition of currency, was the Latin definition—

"Quod semper, quod ubique, quod inter omnes,"

and that also was in accordance with the opinion of Mr. Jones Loyd. With regard to the effect of currency upon prices, he believed if the Bank issued a million of Bank notes it would not affect the prices of commodities, and as to the value of money, that, he believed, was regulated by the interest which could be obtained for it, not in the public funds, but at a private bank. The enlargement of the currency, therefore, would produce no effect upon the price of commodities. He distrusted the two great principles upon which the measure of the right hon. Baronet was founded, and he felt quite confident that its tendency would be to lower the range of prices; by substituting bullion for paper to a greater extent than at present in the currency of the country. As to the measure of 1819, he thought it did not fix a proper standard of value; but he did not attribute to it the misery and commercial embarrassments which resulted from the measures by which it was accompanied. The effect then was an alteration in prices to the amount of 4 or 5 per cent., and the effect of it was, that gold could not be retained in the country. He contended that the measure now proposed would lock up in the Bank of England the bullion at present contained in it. It could only be got out by sending in Bank of England notes. Now then, why did not the Bank employ that gold and expand the currency? Because nobody would give them anything for it, which would make it worth their while to bring it out. In fact, the Bank could not increase the currency, or force the employment of a currency which the country did not require. It could not expand the currency without increasing its own risks. Under the measure they would have a weekly return of 30,000,000l. of notes. But of these 10,000,000l. might be lying idle. How then, he would ask, were they to know how much of the currency thus returned was really active, and how much of it was passive currency lying unemployed? He understood that the Ministry, for the present at least, had given the go-bye to the question of a single bank of issue, and he was glad of it, for he thought that no bank should be entrusted with such extensive powers. He could not help observing, that although much weight had been attached to the opinions of Mr. Jones Loyd, and other witnesses examined before the Currency Committee, that there were many authorities entitled to be listened to who dissented from those opinions. However, it appeared that the right hon. Baronet had found means to still all opposition. He had given the country bankers a bonus; and, as he understood, a guarantee that they should not be again meddled with for ten or eleven years. He would take an- other opportunity of adverting to other points of the subject. From what he heard, it was likely that on the second reading of the Bill there would be a full discussion, and he reserved the full exposition of his views until that occasion.

rose to call the attention of the Committee to one point, and to beg that the right hon. Baronet would afford some explanation respecting it. It was one of general interest and application. In the matter before the Committee, important as it was —proposing to secure ends the most desirable, those of confirming the credit of the country, and ensuring the steadiness of its Currency—he feared that there was involved one principle injurious to the labour and productive capital of the country. He felt a very serious doubt upon this point; but at the same time, feeling the greatest confidence in the Government—knowing the great experience and infinite prudence of the right hon. Baronet at its head, he was sure that the subject must have attracted his attention. Several hon. Gentlemen had, in the course of the debate, expressed opinions upon this branch of the subject with which he could not agree—for he did think that the amount of circulation affected prices most materially. The quantity of money circulated varied inversely with the prices of commodities. If there was a large amount in circulation, prices would rise—if a small amount, prices would fall. He would, therefore, suggest this doubt, not only as agitating his own mind, but that of many others. It was how far the extension of the principle of the Act of 1819, as carried out by the alterations in the system of issue and of the re-organization of banking establishments taken together—as now proposed by the Government —would, by limiting the amount of the circulating medium, taking the average of the last two years, without reference to the increase of production in this country, affect prices. For if the quantity of commodities produced increased in amount, while money remained stationary, would not the prices of commodities fall in proportion to the increase of their quantity?

said, with reference to the remarks of the hon. Member for Renfrewshire (Mr. P. M. Stewart) "that the present Measure had been partially prepared by the late Government;" he felt it right to state that the merits or demerits of the measure belonged to the present Government; he had not had the impertinence to leave any proposition for them when be left office; he had left it, how- ever, with a confident hope that no measure proposed by the right hon. Baronet on the subject of the currency, would be founded on principles which he (Mr. Baring) should oppose. His hon. Friend and those who objected to the measure, had been inclined to slip away from the consideration of the actual position in which things stood. In what position did things stand, and on what principle were the issues of paper now regulated? On the occasion of the last arrangement of the Bank Charter, under his noble Friend Earl Spencer, there were two distinct principles laid down, or rather shadowed out. There was in the arrangement, a regulation, which was supposed to govern the future conduct of the Bank relating to issues, and at the same time, and for the first time, the average of the issues and the amount of bullion were published, with the view that private banks should guide their proceedings by these returns. These, he apprehended, were the two great advantages of the proposal of his noble Friend. Now had either of them been carried into effect? So far as regarded the Bank, it was under no regulation as to its issues. It might with respect to them adopt any principle which it pleased. The last Bank Committee had distinctly withdrawn the regulation under which the Bank was supposed to act. So far as their legislation went, the Bank was entirely at liberty as to its issues; but with regard to private and joint-stock banks, would any body venture to tell him, that these establishments had conducted themselves on the principles which it was expected that they would proceed on when the amount of bullion in the Bank should have been published? There was no attempt on their part to show that they had done so. The right hon. Baronet opposite had stated the evidence in the Bank Committee, showing that private and joint-stock banks by no means considered that they were bound to look at the tables published—except, indeed, as a matter of curiosity—and not with any view of regulating their operations. The same result was come to by the Committee on Joint Stock Banks, who had reported their opinion to that effect. They were therefore in this condition—they had no regulation whatever as regarded the issues of the Bank of England, or the issues of private banks. He might be told that this was all very well, but it was the business of a statesman to look at the facts, and judge whether the system had not worked well. Now he was not going over the late periods of difficulty and embarrassment, but a man must have entirely lost his memory if he did not feel that during the last five years they had experienced enough to show that it was advisable to make some endeavour to place their circulation in a wholesome and sound condition. Attempts had been made by one party to throw the blame upon the Bank of England, and by another upon the private banks; but so far as the necessity of legislation was concerned, it was a matter of indifference to which the blame attached. It was no argument in favour of the existing state of things, to tell him that the Bank of England, on the one hand, or that private banks, on the other, were to blame. It was the system which should be amended, and the circulation placed, as far as they could place it, under proper regulation. His hon. Friend near him had stated, that this was a plan verging upon one bank of issue. He confessed, that it was not generally advisable in these cases for the Government to state very broadly the principles upon which they acted, but he thought that it was impossible for the House, on this occasion to move, without having laid down in their own minds what was the right object to which they ultimately aimed. If it be maintained that it was right to have entire free-trade in issues—if that was their object, let them steadily keep it in view. If, on the other hand, the House should be of opinion that this was not a right system— if it should be of opinion, that they ought to confine the issue to one single bank of issue, whether a national bank, or by dealing with the Bank of England, then they ought not to conceal from themselves the principle they were inclined to urge. He had no difficulty, as far as he was concerned in stating that the strong inclination of his mind was in favour of a single bank of issue, and he was not deterred from supporting the measure of the Government, because it was said that it tended to that end. What was the right hon. Gentleman's object? That the circulation, composed of metal, and of paper, should vary as if there were an entirely metallic circulation. He could effect that object by a single bank of issue, but it would be impossible, if they left it to a free-trade in banking, where there would be competing banks, ever to attain it. Let him not however, be misunderstood. They might sweep away the Bank of England and have a free-trade in issues, and yet the ultimate result of the exchanges would bring them back to a right position. In the case of a single bank, however, they would be brought right by an immediate action on the exchanges, as gold went out, the circulation would be diminished. With respect to a system of private banks the result might be ultimately the same, but there would be a long time during which there would be no contraction of the issues, and they would be brought right by one great crash which would carry ruin throughout the country. He wag not frightened at the project of a single bank of issue; if he were to lay down in a new state of society the principle which would be most correct, he would prefer a single bank of issue even to the mixed circulation left by the right hon. Gentleman. He admitted freely, that, the right hon. Gentleman had not carried his principles into full effect; he was, far, however, from considering that a defect, he was far from blaming it, because the right hon. Gentleman had thereby got rid of the opposition of the great bodies which might have thrown difficulties in his course. The right hon. Gentleman was not liable to blame; he had rather shown prudence and caution, and had not rendered it less probable, that he would arrive at the object which he (Mr. Baring), for one, would not dislike to see. He would not then enter into the details of the measure. He rejoiced that the right hon. Gentleman had given time to the House and to the country to consider this measure, before it was discussed, because there were points on which his objections had been removed by further explanation of the right hon. Baronet, and there were others with respect to which he now placed less reliance on his first opinions in consequence of the further consideration and communication with others. As there would be many opportunities for entering into the details, he would not enter upon them that evening. In the debates which would take place, without pledging himself to vote for every particular, he hoped to be able to give to the measure an honest support, and to carry on the discussion with a sincere intention of giving effect to the spirit of the Bill,

as a private country banker, regarded one of the principles of the measure with delight. The limitation of the issues was of great importance, but he thought that limiting them to the average of the last two years was dealing out to them rather a hard measure, because it was well known that, in the manufacturing and the agricultural districts, there had been a great limitation in the issues during the last two years. If the hon. Gen- tleman could persuade the Government to extend the average for the limitation from two years to five, he would be most happy to assist him. Although the end which might be ultimately arrived at was a single Bank of issue, he did not see in this measure, as a necessity, a first step towards it; for, if he so thought, he would give his opposition to the proposal. He trusted that the plan would work according to the right hon. Gentleman's expectations, but, as a member of the community and of Parliament, he feared that the plan might lead to an unnecessary construction of the currency, and therefore might end in a reduction of prices.

intended to reserve the few remarks he had to make to a later stage of this measure, but as the hon. Member for Halifax had alluded to him, he must say that he was the last man who objected to any quotation of what he wrote or said, for he never said what he did not believe to be true, and he never wrote anything to which he did not put his name. He had attended to this subject for a great many years, and he had read the authorities referred to long before the right hon. Gentleman, for he had read Harris, Locke, and others, at the time the right hon. Baronet was Secretary for Ireland. That, however, did not alter the state of the case. The great question for their consideration was, whether the right hon. Baronet's was a sound or an unsound principle. When the right hon. Baronet had fully carried out his principle and his intentions, if the right hon. Baronet succeeded, he would be the first to declare that the right hon. Gentleman was right, and that he had been wrong himself all his life. But till the price of land, and the produce of land, and the value of labour bore the same relative value to gold and silver as they did at the commencement of the trial, then the principle would be tested, and not till then. He was not surprised at Gentlemen on that (the Opposition) side of the House expressing their approbation of this measure, because they were desirous that prices should be reduced to the continental level; but how those on the other side, who believed that the price of corn here should be by many per cent. higher than on the other side of the channel, could support the plan he could not conceive. He did not justify the Corn. Laws as an abstract question, and he had, therefore, always voted against them, but it was his duty to state what the effect of this measure would be. The right hon. Baronet was very pleasant the other evening in referring to a publication issued at Birmingham, considering him as the author. Now, he was not the author; and he never had advocated an inconvertible paper currency. The only question at issue between him and the right hon. Gen-man was the amount of the precious metals into which the paper-pound should be converted. He did not object to the conversion to some certain amount, but whether it should be the same amount here as on the Continent, where corn was less in price, he doubted. He said, therefore, that the Corn Laws must be repealed, or the right hon. Gentleman's measure could not be carried out and fairly tried. He was very much surprised to hear it stated, that the country bankers should regulate their issues according to the exchanges; for though the country bankers were a very respectable body, there was not one in twenty of them who understood the exchanges. Although the right hon. Gentleman was quite right in carrying out his principle, he had encumbered it with much unnecessary machinery. He did not believe that it was necessary to interfere with the country banks; he was satisfied that without mentioning the private banks, or the Joint Stock Banks, the whole might be regulated without interference with them. If a law were passed which would work by itself, without any interference by Her Majesty's Ministers, or by Her Majesty, by which the Bank of England would be obliged at all times to keep a certain amount of bullion, the whole good would be effected. There was another point to which he objected: that the Bank issues and the banking business should be under the same roof and the same direction. He did hope that they would place the bank of issue in other hands than those of the Bank of England. There were also two other points which he wished shortly to mention. In all instances of panic during the last twenty-five years the Bank had never taken sufficiently early measures for contracting the circulation; and, therefore, it was not fair to say that the want of care was attributable to the country bankers. He believed that bullion to the value of one-half the amount of paper in circulation ought always to be kept by the Bank. As to the misconduct of the joint-stock banks, he did not see how they could prevent mismanagement and speculation by legislation. He could not, for instance, see how speculation in Spanish bonds, to which the right hon. Gentleman had alluded, could be stopped by legislation. The right hon. Gentleman was at length about to do what he was bound to do—to carry out his own principles completely. He was now pledged to it himself, and he had pledged the Bank of England, so that they would now see whether his measures were sound.

would not at present enter into the reasons which made him differ from most of his Friends on that side of the House, and from the Gentleman who had spoken on the other side, and made him very reluctant to admit the merits of the proposition of the right hon. Baronet. Undoubtedly the purpose of the right hon. Baronet was very praiseworthy, but his measures would not have the effect of placing matters on a sound and healthy footing; on the contrary, he believed that they would have the effect of substituting a more unsafe form of credit than at present prevailed. It was extraordinary to hear the confusion which prevailed between sound principles of banking and sound principles of currency. There was only one argument of the right hon. Baronet to which he would advert, and he did wish to guard the House against the impression which his statement had made, and against the supposition that the facts supported his conclusion. The right hon. Gentleman said it was necessary to control the system of issues by country bankers, and he therefore read an alarming list of the failures of private banks; but when he mentioned the proportion of these private banks which were also banks of issue, the argument appeared to tend more against the system of banking than against the issue of notes. Out of the eighty-one banks which had failed during the period mentioned by the right hon. Gentleman, the banks of issue were only twenty-nine whose failure might be ascribed to their issuing notes, but the failure of the other fifty-two could not be ascribed to that cause. And when the right hon. Gentleman adverted to the widely spread ruin which followed the failure of those country banks, he must ask whether all the country bank failures could produce such instances of injury as had occurred from the failure of one private bank in London which he could mention. It appeared to him that the Returns did not bear out the argument of the right hon. Gentleman. He had hoped when the Return was made, that they would have procured more information; he had been led to hope that the amount of outstanding notes at the time of the failure of the bank would have been given, that however, was not in the Return, and they could not tell what had been the amount of mischief from the non-payment of notes. There was, however, one remarkable case in point, the difficulties of the Northern and Central Bank had occasioned little loss to the holders of notes. He begged the House, therefore, not to be carried away by a conclusion which the facts failed to prove, for there must occur in every country where banking is allowed, failures from different causes, which the issue of notes could not produce.

observed, the hon. Gentleman had said, that many banks had failed which were not banks of issue; but when he spoke he was addressing himself to the memorial of the joint-stock banks, in which it was stated that the present system of banking was perfect, or so good that they deprecated any alteration. He had stated, that it was difficult to maintain this perfection after the experience of the last twenty-five years, when he found that during three years 240 banks had failed, and that during the last four or five there had been eighty-five failures, it could not be inferred that the present system was excluded from all possible improvement. He thought he had proved that the powers of issue were a great encouragement to the establishment of banks and to their mismanagement. It was true that other banks might mismanage their concerns, but he was going to try and improve the system of banking generally; he was about to remedy the evils under which the Joint Stock banks laboured; he was about to provide that, on the establishment of joint-stock banks, a certain portion of the capital should be paid up, and he was about to introduce new modes of management. Although he could not control every private bank, although there might still be transactions in railway shares and in Spanish bonds, yet he would call upon the public to exercise vigilance and caution in their transactions, and if they placed their confidence in banks which were badly managed they must suffer for it. He rejoiced that the right hon. Gen- tleman (Mr. Baring), and the hon. Member for Birmingham, made so near an approach to his views. He had never done the latter hon. Gentleman the injustice of supposing that he was the author of the letters he had quoted, the letters might be the production of one of the hon. Member's constituents. He was glad to hear, however, that the hon. Gentleman advocated a standard price, only that he thought it should be in corn, and not in gold. The hon. Member deprecated any interference with banks, and yet he advocated a law which fixed a certain amount of bullion, but how could the hon. Gentleman deprecate such an interference when he would have enacted such a law? If paper were to be convertible into gold, what would be the details of the hon. Gentleman's measure by which he would compel the Bank to make the conversion. He said, "here are ten millions which you are never to touch, here is a sacred deposit." [Mr. Muntz had not advocated non-interference with the Bank.] How a bank which was always liable to pay on demand could be made to do so, when there was a fixed amount of bullion, he could not tell. My hon. Friend (Mr. Newdegate) continued the right hon. Baronet, has put a question to me, which is important, because, although it was put briefly, yet it includes the chief objections which are felt by many to the measure which I propose; and I am anxious, both on that account, and from feelings of esteem for a young Member of this House, who will, I am sure, distinguish himself, to give an answer to it. The question of my hon. Friend was this—"How far the extension of the principle of the Act of 1819, as carried out by the alteration of the system of issues, and by the re-organization of banking establishments, taken together, as now proposed by the Government, will, by limiting the amount of circulating medium and the facilities for circulation to the average of the last two years, without reference to the increase of production in this country, affect prices? For, if the quantity of commodities produced increase, and the amount of money remain the same, will not the price of commodities fall in proportion to the increase of their production? "To this question my answer is, that the present measure is not an extension of the principle of the Act of 1819—it is the fulfilment and complement of that Act, but it does not carry the principle of a metallic standard farther than it was carried by the Act of 1819, That Act restored a metallic standard; it required that promissory notes should not be issued excepting on the condition that they were convertible into gold at the will of the bearer. They are issued on that condition. Under the system that exists, they may not, for a time, conform in value to gold — they may be issued in excess—they may be the means of affording a greater degree of temporary accommodation than could be afforded by a metallic currency—they may increase prices, and create for a time the appearance of prosperity. But they do all this with the certainty of ultimate reaction,—the certainty that the time must come when, if you adhere to a metallic standard, and if you maintain it unaltered, that standard will assert its supremacy, will refuse to conform to the value of paper, and will require that paper shall conform to the value of gold. When the depreciation of the paper is sensible,— when it becomes a matter of notoriety, the law enjoining its equivalency to coin will be enforced by every holder of paper, from the man whose whole property is a single five-pound note, to the great capitalist who influences the foreign exchange by the extent of his dealings in money. The certain means of realising a small profit will impel every holder of paper to demand coin in exchange. What advantages will there have been in the temporary accommodation, what advantage in the temporary increase of prices, if they are to be followed—as I contend they inevitably will—by such a contraction of paper as will make it equal in value to coin? Let us not confound that accommodation which is afforded by the liberal advance of capital, that increase of prices which springs from general prosperity and increased demand, with the accommodation and increase of prices which rest on no surer foundation than an undue issue of paper. I call it an undue issue, if its value do not conform with that of the coin which it professes to represent, and which the law has made the measure of value. I have thus given to the question of my hon. Friend that answer which I believe to be a satisfactory answer, provided you admit that there is, and that there ought to be, a metallic standard. He had omitted to mention one evidence of the operation of inconvertible paper. In 1797 there were only 240 private banks, but the moment liability to convert was removed, more of these banks were established, and when they had to deal eight or ten years afterwards with them, their number had increased from 240 to about 800; it was because they found such great advantages in inconvertibility, that the banks of issue were so much increased.

had looked through the average issue by private banks in each county in England and Wales since the year 1834 to September 1840, and had taken the county of Lincoln as a great agricultural county, and observed in the return of issues from that county, which was the largest with the exception of Yorkshire, the fluctuations which had taken place. The right hon. Baronet had stated, that he wished that the issues of country banks should be limited to the average of the last two years. He found, however, in the county of Lincoln that there was a great difference between 1842 and 1843, as compared with some of the previous years, the issues varied according to the price of agricultural produce, the condition of the farmer, and the consequent demand for money amongst that class. This was proved by the fluctuations in the March and June quarters, caused by the fairs, as exemplified in the following return for Lincolnshire:—

He found, by a calculation which the Chancellor of the Exchequer had been kind enough to order for him, the nature of the Returns at the present time. The average circulation of the year 1841 was 387,000l., in 1842 350,000l., and in 1843 314,000l. From 1825 only one bank in Lincolnshire had stopped payment, and that had paid 20s. in the pound. It was evident, from the facts he had stated as to Lincolnshire, that in agricultural counties the amount of issues depended on circumstances, and it was scarcely fair to take the average of so short a period as the limit of the issues of country banks.

asked if the banks which the noble Lord referred to were private banks?

said, there was only one joint-stock bank in the county.

In answer to a question from Mr. Thomas Baring,

said, I understand my hon. Friend to imply a doubt as to the policy of that part of the plan which will limit the issue of the Bank upon securities to a gross amount, and will require that the profit of any issue upon securities that may be permitted, under certain circumstances, beyond that amount, shall belong to the public. My hon. Friend asks, what inducement will the Bank have to supply any void that may arise in the country circulation, since the Bank is to have no profit for an issue made for that purpose? I answer, in the first place, that we must assume that the Bank will feel an interest, apart from the mere consideration of pecuniary profit, in increasing its control over the general circulation, and thus diminishing the risk that the action of the Bank upon the exchanges, whenever such action is necessary, can be counteracted by other issuers of paper. In the second place, the Bank may protect itself from loss by supplying the void that may be created in the country circulation, and will thus have a direct pecuniary inducement to supply it. Suppose the notes of the Bank, issued for the circulation of the metropolitan district and for the general purposes of commerce, to amount to 22,000,000l., and that the banking department has a supply of 6,000,000l, of notes lying dormant, received from the issue department in exchange for gold; suppose also 2,000,0001. of the country circulation to be withdrawn, and a demand therefore for an increased issue beyond the ordinary circulation of 22,000,000l. to arise; it would in that case be a source of profit to the Bank to supply the void from the stock of notes in the banking department, without requiring permission from the Queen in Council, to increase its issues upon securities. Let us now take the case of there being no stock of unissued notes in the banking department, justifying the supply of the void from that department. The Bank would then have no alternative but to supply the void, with the consent of the Privy Council, by an issue upon securities beyond the amount of 14,000,000l. The question is, what interest will the Bank have in seeking permission to make such an issue, as the profit will belong to the Government? I answer, that the Bank, by obtaining such permission, will protect itself from a loss to which it will be otherwise liable. According to the assumption, the void in the currency takes place, and is not supplied by the Bank from its ordinary resources. The notes remaining in circulation will then become more valuable; there will be an influx of gold; and that gold will be tendered to the Bank, which must give notes in exchange for it. On that issue there would not only be no profit, but there would be an absolute loss, amounting to the charge of the manufacture and the issue of notes, which, in the case supposed, will fall upon the Bank. Should the increased issue take place upon securities, although the nett profit will belong to the public, yet the charges also, namely, the commission of 1 per cent. upon the issue, and the expense of the notes, must also be defrayed by the public; and it will be less disadvantageous to the Bank, under the circumstances supposed, to issue notes upon an increased amount of securities, than upon gold. He should be glad, the right hon. Baronet continued in reference to Lord Worsley, to attempt to relieve the noble Lord's anxiety with respect to country banks; the noble Lord feared that, by taking an average of the last two years, there might be some inconvenient restriction on the issue of country banks, and, therefore, a diminution of the accommodation given to agriculturists. The noble Lord said, that, during a considerable portion of the last two years, there was a depression in the price of agricultural produce and there was a panic; and, therefore, it was unfair to take the last two years. Now he would just read the issues of country banks for the last six months. They were represented by these figures: 3,400,000l., 4,900,000l. 4,500,000l., 4,800,000l., 4,900,000l., 4,900,000l. These were the average monthly issues of country banks for the last six months, during which period there had been no panic, and no great depression of agricultural produce. Was he going to call for the reduction of these issues, an average which would tell inconveniently on the banks, and restrict their issues? Take the first six months which he was going to admit into the average; he must begin, of course, with May, 1842. The noble Lord would observe that the last six months never in any case exceeded five millions. He would take the first six or eight months he was going to permit country banks to take into the average, and beginning with May, it was 5,360,000l., 4,999,000l., 5,100,000l., 5,100,000l., 5,098,000l., 5,488,000l., 4,434,000l., 5,085,000l. So that he was going to permit the country banks to have an average of two years, and he showed to the noble Lord that the first six months of these two years exceeded, in every case but one, five millions; and in the last six months there was no depression of price, no panic, no want of accommodation. He asked the noble Lord whether he had satisfied him that country banks could extend their accommodation. The noble Lord said, that Lincolnshire was a fair test. Now, he believed that Lincolnshire and Leicestershire were the counties in which there was the greatest variation in the amount of issues. At one time in Lincolnshire it was 4,100,000l., at another time 4,500,000l., the mean was 4,250,000l. What could prevent the Leicestershire banks keeping 40,000l. Exchequer Bills, and to provide for an increased circulation of notes, by selling out 25,000l. of the Exchequer Bills, demand notes of the Bank of England, and supply the accommodation as usual with Bank of England notes? This was all he asked them to do. He did not ask them to make a deposit as of securities. All he asked of them was, if they wanted 25,000l. more, to supply that out of capital and not from credit. There were seventy banks, which contrived to give accommodation without any issues of their own. He left to these banks the power of issuing 4,250,000l., and if on any occasion they wanted an excess, all he asked of them was to give security for that excess, to supply it from the capital.

the times taken by the right hon. Baronet in his statement of figures were just before a panic began, and just after a panic had ceased.

Resolutions agreed to.

House Resumed, Resolutions to be reported.

House adjourned at half-past one o'clock.